American Rescue Plan Includes Help for Craft Distilleries

The American Rescue Plan Act of 2021 was signed into law on March 11, 2021. The signature legislation of President Biden’s first 100 days provides $1.9 trillion to stimulate the economy, helping individuals and small businesses.

For craft distillers, there is an important new program in the legislation, the Restaurants Act. This legislation will provide over $28 billion in grants to restaurants. These are grants, not loans, so they will not have to be paid back. With work last year, ACSA and other beverage alcohol trade groups were specifically able to include tasting rooms and tap rooms in the definition of establishments that are eligible for the grants.   

Grants are available for up to $10 million per entity, with a limitation of $5 million per physical location. Entities are limited to 20 locations. Grants may be used for a wide variety of expenses, including payroll, mortgage, rent, utilities, supplies, food and beverage expenses, paid sick leave, and operational expenses. 

Eligible expenses are those incurred from February 15, 2020, to December 31, 2021, or a date determined by the SBA. If all grant funds are not spent by the business, or the business permanently closes before the end of the covered period, the business must return unused funds to the Treasury.

The formula for determining the grant will be the losses sustained (minus government assistance like PPP) from 2019 to 2020.

To help truly small businesses, $5 billion is being set aside for businesses with $500,000 or less gross receipts in 2019. Additionally, when the program does open to the public, for an initial 21-day period, the SBA will prioritize awarding grants for small business concerns owned and controlled by women, veterans, or socially and economically disadvantaged small business concerns. 

The SBA is in the process of writing rules for the program. ACSA will be consulting with the SBA on this process. It is expected the program could be up and running within weeks.

The American Rescue Plan contains several billion in new funds for Economic Industry Disaster Loans (EIDL). This program ran out of funds, but is now back and running.

The American Rescue Plan also extends the Employee Retention Tax Credit for eligible employers that continue to pay employee wages during COVID-19-related closures or experience reduced revenue through December 31, 2021. It allows businesses to offset their current payroll tax liabilities by up to $7,000 per employee per quarter. This is up to $28,000 per employee for 2021.

As for PPP, the program was just recently extended in other legislation. It will provide until May 31, 2021, for distillers to receive a first or second draw PPP loan. The second draw loan must show a 25% reduction in profit reduction between 2091 and 2020. While the deadline is for the end of May, SBA recently testified before Congress that current and new applications by the end of April may obligate the remaining $79 billion in the PPP fund. It is unclear if Congress will continue the program or add additional funds once this extension expires.  

Separately, ACSA continues to support and work for passage of H.R. 1035, introduced on a bipartisan basis by Rep. Jennifer Wexton (D-VA) and Rep. Maria Salazar (R-FL). The bill now has over 40 co-sponsors. The legislation would allow distilleries to borrow at higher amounts from PPP, 3.5 times monthly expenses which was provided for restaurants and bars, unlike the 2.5 times allowed for all others. It will also provide parity in statute for the program that directs SBA to make loan and interest payments for eight months for hard-hit industries.

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