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Restaurants have been severely impacted by COVID-19 because of permanent and temporary shutdowns that eliminated or reduced revenue, and the increased costs that many operators incurred to bolster take-out and delivery sales and accommodate a reduction to 25-50 percent of dine-in capacity. According to the National Restaurant Association, over 110,000 restaurants closed since March 2020.
The American Rescue Plan Act of 2021 (ARPA) became effective on March 11, 2021 and provides financial relief for restaurants and related food and beverage service businesses with its $28.6 billion
Restaurant Revitalization Fund (RRF). The Small Business Administration (SBA) has been designated as the administrator of the RRF. Loan applications and forgiveness requests will not be required because the RRF is a grant program. However, applicants must certify that the grant is necessary to support ongoing operations.
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Washington, D.C. (April 12, 2021) - Restaurants
and bars, among the businesses hit hardest by the COVID-19
pandemic, will soon be able to apply for a new tax-free grant
program enacted as part of the recently enacted American Rescue Plan Act of 2021, signed into
law on March 11, 2021. The Restaurant Revitalization Fund (RRF)
will provide $28.6 billion in grants for eligible restaurants and
bars that can certify they need the funds to support ongoing
operations of the business.
The SBA has yet to issue specific guidance and establish an
The Coronavirus Aid, Relief, and Economic Security Act (as amended and modified, the “
CARES Act”) was enacted to provide immediate assistance to individuals, families, and businesses affected by the COVID-19 emergency. Among other provisions, the CARES Act allowed Congress to authorize the Small Business Administration (“
SBA”) to temporarily guarantee forgivable loans under a new 7(a) loan program titled the Paycheck Protection Program (“
PPP”).
On December 27, 2020, the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act (the “
Economic Aid Act”) was enacted and authorized additional funds for new First Draw PPP Loans and for Second Draw PPP Loans. On January 6, 2021, the SBA and the Department of Treasury released an Interim Final Rule called “Business Loan Program Temporary Changes; Paycheck Protection Program as Amended by Economic Aid Act.” That rule restates existing regulatory provisions into a single regulation on borrower eligibil
On January 6, 2021, the Small Business Administration (the “
SBA”) and the Department of Treasury released an Interim Final Rule called “Business Loan Program Temporary Changes; Paycheck Protection Second Draw Loans” (“
Second Draw Rules”). These rules announced the implementation of section 311 of the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act (the “
Economic Aid Act”). The SBA also released an Interim Final Rule called “Business Loan Program Temporary Changes; Paycheck Protection Program as Amended by Economic Aid Act” (“
Consolidated First Draw PPP IFR”). That rule restates existing regulatory provisions into a single regulation on borrower eligibility, lender eligibility, and loan application or origination requirement issues for new First Draw PPP Loans, as well as general rules relating to First Draw PPP Loan increases and loan forgiveness. Both rules take effect immediately. For more information on the Consolidated First D
Tax Tips: The ever-changing landscape of state treatment of PPP loan forgiveness
CARL GRASSI
Carl Grassi
As part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, the Paycheck Protection Program (PPP) provides loans to qualifying businesses impacted by the COVID-19 pandemic. Businesses that use PPP loan funds for certain qualified business expenses (for example, payroll costs, mortgage interest payments, rent and utilities) can receive partial or full forgiveness of PPP loans if certain requirements are met.
Usually, forgiven loan amounts are taxable for federal income tax purposes, but the CARES Act excludes the forgiveness of PPP loans from gross income on a federal level. The Economic Aid to Hard-Hit Small Businesses, Nonprofits and Venues Act (Economic Aid Act) further provides that business expenses paid with forgiven loan proceeds are tax-deductible for federal income tax purposes.