How Biden's American Rescue Plan will help struggling restaurants, bars

After nearly a year since bars and restaurants were forced to close their doors, adjust service or permanently suspend operations, the hard-hit industry is set to receive some much-needed relief.

The American Rescue Plan signed by President Biden includes a hard-fought $28.6 billion grant program modeled after the RESTAURANTS Act that will help independent restaurants and bars rally in the wake of the COVID-19 pandemic.

On Thursday, Senate Majority Leader Chuck Schumer, Rep. Earl Blumenauer, along with a handful of co-founders from the Independent Restaurant Coalition, (IRC), explained how the plan will directly help independent restaurants, bars, cafés, food trucks, caterers, breweries, distilleries, and others devastated by COVID-19.

"Without the IRC, I don’t know if it would have gotten done at all," Schumer said. "The IRC designed this bill to work well. We’ll stick with [the IRC] to make sure it’s implemented quickly … and we’ll be ready to renew."

Blumenauer, who first introduced the bill, called the IRC's work "awe-inspiring" and said "this bill would not look like it does without the IRC -- [who] provides a network to be able to communicate that will be essential to replenish the fund."

"I hope the IRC becomes a permanent fixture for restaurants across the country and in D.C.," he added.

The group encouraged all struggling neighborhood restaurants and bars to use the $28.6 billion grant program and go about the process of receiving funds.

How It Works

This program is direct grant support through the Small Business Association for restaurants devastated by the pandemic. It can be used alongside the Paycheck Protection Program, Economic Injury Disaster Loans and the Employee Retention Tax Credit to help vulnerable businesses survive the remainder of this crisis.

For more information, check out the full breakdown of how the program works from the Independent Restaurant Coalition here.

Of the $25 billion total package, $5 billion has been reserved for establishments with less than $500,000 in gross receipts in 2019.

The SBA administrator can create other tiers but the administrator will first prioritize grants for eligible entities owned or controlled by women or Veterans or are socially and economically disadvantaged businesses, as defined by existing SBA codes.

Which Restaurants Are Eligible?

Grants will be made available to establishments that are not part of an affiliated group with more than 20 locations. Additionally, the restaurant or bar cannot be publicly traded or have a pending application under the Save our Stages program and there are limits on the participation of private equity funds.

How Grant Amounts Will Be Calculated

The size of the funds will be based individually on the difference between 2019 and 2020 revenue. Eligible expenses include rent, payroll, supplies, mortgage, COVID-related construction, personal protective equipment and paid sick leave.

For established restaurants, the total is calculated by the 2019 revenue minus 2020 revenue minus PPP loans.

For restaurants that opened in 2019, the total will be the average of 2019 monthly revenues X12, minus 2020 revenues.

Restaurants that opened in 2020 are eligible to receive funding equal to the eligible expenses incurred.

A grant maximum of $10 million per restaurant group and $5 million per individual restaurant has been established.

Any grant money that is not spent by Dec. 31, 2021, will be returned to the federal government.

How To Apply for the Grant

During the program’s initial 21-day period, the Small Business Administration will prioritize awarding grants to eligible entities that are owned or controlled by women or veterans or are socially and economically disadvantaged businesses.

What Expenses Are Eligible for Grant Funds

Payroll and benefits, not including employee compensation exceeding $100,000/year, mortgage and rent (no prepayment), utilities, maintenance, supplies (including protective equipment and cleaning materials), food, operational expenses, covered supplier costs as defined by the SBA under the PPP program, sick leave, and any other expenses deemed essential by the Administrator.

Grants can be spent on eligible expenses from Feb. 15, 2020 through Dec. 31, 2021. The SBA may extend that period through two years from enactment if conditions warrant.

What Restaurant Leaders Are Saying

"Everyone that depends on restaurants and bars for their livelihoods, the 500,000 small businesses, the 11 million workers, from dishwashers to farmers, servers to florists to chefs, each of them can sleep a little easier and start dreaming of a post pandemic future," Erika Polmar, executive director of the IRC said. "None of that would have been possible without the support of our champions in Congress.”

Tom Colicchio, owner of Crafted Hospitality in New York City and an IRC co-founder, said this group "did not exist a year ago -- when you think about doing what we did in a year, this bill is unprecedented -- Every single person on this call. Every single member of the IRC. I love these people. I would go to war with them."

New York City restaurant owner Amanda Cohen recalled testifying before the House committee on small businesses over the summer. "I implored Congress to find a way to help independent restaurants," she said. "Today, I can confidently say that Congress heard me. The $28.6 billion program for our broken businesses will help countless restaurants, not only survive the pandemic, but will also make them whole again."