Pennsylvania Creates COVID-19 Hospitality Industry Recovery Grant Program

The $145 million grant program, which passed unanimously in both the Pennsylvania House and Senate, is designed to provide much needed relief to restaurants, bars and hotels adversely affected by the COVID-19 pandemic and related restrictions.

All 67 counties in Pennsylvania were granted a certain amount of funding based on population and each county will handle the administration of its allotted funding.[1] Grants will be awarded to eligible businesses in $5,000 increments, with $5,000 being the minimum and $50,000 being the maximum amount available. Eligible businesses will be able to apply for a CHIRP grant through the applicable county website beginning on March 15, 2021 at 11:00 AM.

Eligibility Requirements

To qualify for a CHIRP grant, a business applicant must, at a minimum:

• Have a North American Industry Classification System (NAICS) designation within the Accommodation subsector (721) or Food Services and Drinking Places subsector (722).
• Be a for-profit company (publicly traded and non-profit companies are ineligible).
• Have fewer than 300 full-time equivalent employees.
• Have a maximum tangible net worth of no more than $15 million.
• Be in operation as of February 15, 2020 and not intend to permanently cease operations within one year of the date of application.
• Be able to demonstrate at least a 25% decline in gross receipts when comparing annual or quarterly revenue between 2019 and 2020 due to the financial impact of COVID-19. If the business started between July 1 and December 31, 2019, Q3 or Q4 2019 revenue must show at least a 25% decline compared to any quarter in 2020. If the business started between January 1 and February 15, 2020, it must demonstrate at least a 25% decline when comparing Q1 of 2020 to any other quarter in 2020.

While the above-listed requirements will apply to applicants in all Pennsylvania counties, individual counties may impose further eligibility requirements, so applicants should carefully review the eligibility criteria and necessary documentation for the county in which they are headquartered.

Prioritization of Applicants

Rules regarding how grant applicants will be prioritized to receive funding will vary by county. Philadelphia has indicated that priority will be given to eligible business applicants that:

• Have not received a COVID-19 relief loan or grant from the city, state or federal government.
• Were subject to closure by the Governor’s disaster declaration.
• Are owned by historically disadvantaged people.
• Are located in an area with high poverty.
• Can demonstrate a 50% or greater revenue reduction, as measured by gross receipts between Q2 through Q4 2019 and Q2 through Q4 2020 (calculated annually or quarterly), due to COVID-19.

Conditions for Applicants who Previously Received COVID-19 Relief Funding

Receipt of a loan or grant issued by the federal or state government does not disqualify a business from being eligible for the CHIRP grant. However, the relevant statute provides that CHIRP grant funds may not be used to pay the same eligible operating expenses for which a business received payment, reimbursement or loan forgiveness pursuant to the CARES Act or Consolidated Appropriations Act or the Pennsylvania COVID-19 Emergency Supplement to the General Appropriations Act of 2019.

The COVID-19 Task Force at Klehr Harrison stands ready to assist you in your business and legal needs. We will continue to provide additional information and guidance as the COVID19 situation develops.

Author Adrienne C. Beatty is an associate in the Corporate & Securities Department at Klehr Harrison.

[1] Philadelphia County has received approximately $17 million, Montgomery County has received approximately $9.4 million, Delaware County has received approximately $6.4 million, Bucks County has received approximately $7.1 million and Chester County has received approximately $5.9 million.