This morning, the Small Business Administration announced that $2.7 billion of grant relief funds have been distributed to 21,000 restaurants nationwide since the start of the Restaurant Revitalization Fund began accepting applications on May 3. That’s grant money — not loans — sent to specific groups including restaurants, bars, pop-ups, street vendors, wineries, distilleries, and other food hospitality businesses to help make up for losses incurred during the coronavirus pandemic. It’s certainly no small sum — but wait, there’s more.
Just to name a few: There’s a new state tax cut for restaurants and food service businesses, a stimulus check for state residents, and a city proposal for direct aid to restaurants street vendors, all while minimizing fees and red tape. Here’s what to know about aid programs for small food businesses in Southern California, right now.
Before jumping into those state and local details, it’s important to note one rapidly-approaching deadline for the Restaurant Revitalization Fund grants. Federal officials will only continue to review and prioritize businesses from some specific food categories until May 26, less than two weeks from now. So if restaurant ownership is 50 percent or more from the following groups, SBA will continue to prioritize those applications for now:
- Latino Americans
- Native Americans
- Alaska Natives
- Asian Americans and Pacific Islander Americans
- African Americans
- Economically or socially disadvantaged groups
Starting May 27, officials will begin to review all applications in the order in which they are received. Eligible restaurants must be open (or temporarily closed) and have less than 20 locations; owners can utilize EIN or social security numbers to apply. If the business in 2020, the same eligibility applies. To apply for the grant, it is not required to file a tax return for 2020. The RRF will cease as soon as the program runs out of money, though it’s not clear exactly when that will be since the grant amounts vary by application and there is already lobbying underway to add to the fund. Details and the application are available online at the SBA website.
Federal Tax Break
This morning, the Biden administration again encouraged restaurants and businesses to take advantage of the employee retention credit tax break. The ERC gives eligible businesses a refundable tax credit up to $5,000 in qualified wages paid per employee in 2020.
Brett Hazlett — financial consultant for accounting and advisory firm BPM LLP — noted that California restaurants may not be aware of the employee retention credit. “Basically, in every quarter, you take the first $10,000 in wages that you pay to an employee,” says Hazlett, “and you get 70 percent of that back as a credit. You can do that in every quarter this year that you’re eligible. So that’s it’s to $8,000 per employee, potentially. It’s a pretty big advantage now. There’s a real opportunity to put these pieces together, and make sure that restaurants are aware of everything that’s out there for them.”
California rental assistance, stimulus check expansion, plus a new tax break
On May 13, California Gov. Gavin Newsom proposed a program that would provide grants up to $25,000 for small business owners and restaurants impacted by the pandemic, reports the Los Angeles Times. It’s been a week for the governor, who on Monday proposed a number of breaks for California residents, including a second round of $600 stimulus checks as well as state money to cover unpaid rent for low-income tenants. In January, the State of California sent stimulus funds for low-income residents, but the current expansion will include households earning up to $75,000 in adjusted gross income. All require approval from the state legislature.
Less than two weeks ago, California Gov. Gavin Newsom signed Assembly Bill 80 by Inglewood assemblymember Autumn Burke into law. Under AB 80, any forgiven PPP loans received by restaurants or businesses during the pandemic will not be counted as taxable income on state tax returns, which could further make a difference for any restaurant that falls into that category.
As these other programs move forward, LA mayor Eric Garcetti has also proposed a $25 million city-only program designed to help restaurants deal with debt. This suggestion is part of the annual budget, up for approval on June 1, and would fund programs for L.A. restaurants, bars, cafes, and food businesses. Details include a reduction in city alcohol permit fees, and a streamlining of the permit process overall, as well as a suspension of valet and offsite parking requirements, making the al fresco dining program permanent, and supplying businesses with checks for $5,000 apiece. Also included is $1.3 million in aid for street cart vendors to help pay fees, permits, and purchase new carts that are up to city code.
That’s all to say, there’s a lot of financial help going around right now for small businesses that have struggled mightily for the past year-plus.