Restaurant Revitalization Fund: Grant Opportunities Available Soon

As we’ve now surpassed the one-year mark since the global pandemic first began, it’s hard to deny that the restaurant industry has been one of the hardest-hit sectors during this time. The Restaurant Revitalization Fund (RRF) relief program was created under the American Rescue Plan Act of March 2021 to provide $28.6 billion in tax-free grants to help restaurants rebuild and reopen. Although applications are not ready to be filed with the SBA, details of the program and a sample application has been released to help businesses begin preparing to file.

If you’re considering applying for the RRF, you will want to submit your grant request as soon as possible because the $28B in funding is significantly less than the $68B remaining in the Paycheck Protection Program (PPP). Although the applicant pool for the RRF may be less than PPP applicants, there is huge potential that RRF funding could be absorbed very quickly due to the expanded eligible expenses.

We have summarized the aspects of the program that have been released, although we are still awaiting additional guidance from the SBA.

Eligibility

The RRF awards grants of up to $5 million per physical location, $10 million per entity and affiliates, based principally on the difference between 2020 gross revenues and 2019 gross revenues, and adjusted downward for any funds received and forgiven by the Paycheck Protection Program (PPP).

Eligible entities that have experienced pandemic-related revenue loss include:

  • Restaurants
  • Food stands, food trucks, and food carts
  • Caterers
  • Bars, saloons, lounges, and taverns
  • Snack and nonalcoholic beverage bars
  • Bakeries, brewpubs, tasting rooms, taprooms, breweries, microbreweries, wineries, and distilleries at which on-site sales to the public comprise at least 33% of the gross receipts
  • Inns at which on-site sales of food and beverages to the public comprise at least 33% of gross receipts
  • Licensed facilities or premises of a beverage alcohol producer where the public may taste, sample or purchase products

The list above does not encompass all possible types of entities that provide for on-site sale and consumption of food and beverage, so additional regulatory guidance is needed to discover how these other types of entities can apply for and receive grants under this program.

Application Process

The SBA requests that applications not be submitted at this time, but has released both a sample application and program overview so that eligible entities may begin preparing to file through SBA-recognized third-party point-of-sale vendors or directly through the SBA using the online application portal.

During the first 21 days that the program is open, SBA will only process and fund applications for small business entities that have self-certified it meets eligibility requirements and is at least 51% owned by women, veterans or socially and economically disadvantaged individuals.

Socially Disadvantaged Individuals
Defined as those who have been subjected to racial or ethnic prejudice or cultural bias because of their identity as a member of a group without regard to their individual qualities.
Economically Disadvantaged Individuals
Defined as those whose ability to compete in the free enterprise system has been impaired due to diminished capital and credit opportunities compared with others in the same business area who are not socially disadvantaged.

Required Documentation

The information required for filing with SBA includes the following:

  • Proof of gross receipts and eligible expenses – can be in the form of income tax returns, bank statements, income statements or point of sale reports;
  • Documentation that certain types of entities as denoted above comprise at least 33% of gross receipts in onsite sales to the public;
  • IRS Transcript Request form authorization.

Funding Calculations

The amount of the grant payment for an entity would be calculated based on the following:

Calculation 1
For applicants in operation before or on Jan. 1, 2019: 2019 gross receipts minus 2020 gross receipts minus Paycheck Protection Program (PPP) loan amounts.
Calculation 2
For applicants that began operations partially through 2019: (Average 2019 monthly gross receipts times 12) minus 2020 gross receipts minus PPP loan amounts.
Calculation 3
For applicants that began operations on or between Jan. 1, 2020, and March 10, 2021, that have not yet opened but have incurred eligible expenses: Amount spent on eligible expenses between Feb. 15, 2020, and March 11, 2021, minus 2020 gross receipts minus PPP loan amounts.

Entities that began operations partially through 2019 may elect to use either Calculation 2 or Calculation 3. Gross receipts for these calculations do not include amounts received from PPP loans, Employee Retention Credit (ERC) wages, Economic Injury Disaster Loans (EIDL) or advances, state and local grants or SBA Section 1112 payments.

NOTE: it is not yet clear as to how restaurants that were in operation prior to 2019 but had a change in ownership will be considered. This is one of the many subjects we expect to be addressed in SBA guidance.

 

Funding Usage

Awarded funds may be used for the following expenses incurred between February 15, 2020, and March 11, 2023:

  • Business payroll costs, including sick leave
  • Payments on any business mortgage obligation
  • Business rent payments, not including prepayment of rent
  • Business debt service, both principal and interest, not including any prepayment of principal or interest
  • Business utility payments
  • Business maintenance expenses
  • Construction of outdoor seating
  • Business supplies, including protective equipment and cleaning materials
  • Business food and beverage expenses, including raw materials
  • Covered supplier costs
  • Business operating expenses

SBA call center support is available at 844-279-8898, Monday through Friday, 8 AM to 8 PM EST. Applicants can also receive assistance through their local SBA district office.

If you would like personalized assistance with the sample application or have specific questions related to the eligibility of your business, BMF Advisors stand ready to help you be prepared.

We will keep you up to speed as additional information about this program develops.

About the Authors

Dale A. Ruther
Dale A. Ruther
CPA, CIT, CDS, CCIFP
Partner, Taxation Services
James E. Merklin
James E. Merklin
CPA/CFF, CFE, CGMA, MAcc
Partner, Assurance and Advisory

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