$145 Million in Relief for Restaurants and Hotels

After months of uncertainty about whether additional relief for restaurants and hotels would come from state and federal government sources, some good news has started to flow to the hotel and restaurant industry. The latest comes in the form of a $145 Million allocation of funds to provide grants to those restaurants and hotels that have been significantly impacted by the COVID-19 pandemic.

On Friday, as part of a larger $900+ Million relief package aimed at helping businesses, local governments, and others, the Governor signed Senate Bill 109. This Bill allocates $145 Million previously transferred from the PA Workers’ Compensation Fund and designates it for the exclusive purpose of providing grants to hotels and restaurants.

Eligible Applicants

While some of the logistics of how this money will be disbursed still need to be worked out, the Bill provides some framework that can give you an idea now whether you’ll be eligible and will want to apply for the funding.

Generally speaking, the money will be divided up and given to each county to administer through a local Economic Development Organization or Community Development Financial Institution. These organizations will then issue grants to eligible applicants in amounts up to $50,000.

To be eligible, an applicant must:

• be a for-profit, private business
• have fewer than 300 full-time employees
• have experienced a reduction in revenue in any quarter in 2020 that was 25% or more compared to 2019 and
• have less than $15,000,000 in tangible net worth.

There also appears to be a scoring or points system to determine which applicants are most in need.  That system attempts to prioritize applicants who

• may not have received any or as much other federal and state relief (such as PPP loans, EIDL loans, or other local grants)
• were most impacted by the pandemic in the form of closure orders, and
• have had a more significant (50% or more) reduction in revenue compared to 2019.

Eligible Expenses

Those meeting the criteria above are eligible to apply for funds to offset losses and use them toward eligible operating expenses. Eligible Operating Expenses are those that are “ordinary and necessary” and include things like mortgage payments, rent, payroll, utilities, and more.

These expenses have to be incurred between March 1, 2020 and June 15, 2021 (or the date of an application, whichever is earlier) to be eligible.  Businesses cannot double-dip, meaning that they can’t ask for funds to cover expenses that have already been paid for using, for example, a previous PPP Loan.

Miscellaneous Details

The total amount to be allocated to each county will vary, with those with the larger populations receiving more funds.

Regardless, even if you have received other loans or grants during the pandemic, I encourage everyone to submit an application.  Most hotels and restaurants can likely meet the criteria to be eligible and certainly will have eligible expenses that they could use the money for.

Even if there is a high demand for the funds, there is also likely to be a sizable amount of funds that are dedicated solely to the hotel and restaurant industry, one that has been seriously impacted by this pandemic.

Applications have not yet been released but they should be coming in the next few weeks.

This program isn’t the ultimate answer to everyone’s problems in the industry, but it’s another bit of relief to an industry that certainly can use it. If you have any questions navigating the program or your application, please don’t hesitate to call or email the attorneys at Russell Krafft & Gruber.