More on the Restaurant Revitalization Fund

attorney Barry Kurtz

Barry Kurtz | Shareholder

July 15, 2021

The Restaurant Revitalization Fund (RRF) was adopted by Congress in April 2021 to provide financial relief for eligible restaurants and related food and beverage service businesses. $28.6 billion of tax-free federal grants were approved for eligible food service businesses on a first come, first served, basis if their revenue in 2020 was less than their revenue in 2019.

During the first 21 days of the program administered by the Small Business Administration (SBA), priority was given to eligible small businesses owned and controlled by women, veterans and certain racial and cultural groups with limited financial resources. During the 21-day period, businesses in the priority group applied for more than the initial $28.6 billion in the RRF and were awarded grants of approximately $18 billion. The remainder of the $28.6 billion was awarded to eligible applicants not within the priority group.

Several lawsuits were filed in federal courts against the SBA in May based on claims of race and sex discrimination by RRF applicants not within the priority group. As a result, the U. S. District Court for the Northern District of Texas and the U. S. Court of Appeals for the Sixth Circuit ordered the SBA to cease RRF disbursements based on race or sex. Thereafter, the SBA notified more than 3,000 priority group applicants who had previously been approved for grants that their awards had been rescinded.  According to the SBA, applicants who had their approvals rescinded will only receive payment once the SBA “completes processing all previously filed non-priority applications, and only then if the RRF is not first exhausted”.

Still pending before Congress is the Restaurant Revitalization Fund Replenishment Act of 2021 which was proposed by a bipartisan group of lawmakers in the House and Senate to provide an additional $60 billion for the RRF.

Barry Kurtz is State Bar of California Certified Specialist in Franchise & Distribution Law.

This information provides an overview of a specific developing situation. It is not intended to be, and should not be construed as, legal advice for any particular fact or situation.

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