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May 2021

What You Need to Know About Restaurant Revitalization Fund Grants

As more people receive the vaccine and warm weather teases us with promises of long summer nights, enjoying a meal at our favorite restaurant with friends and family and a sense of normalcy, hope for the restaurant and food service industry is on the rise.

President Biden signed the American Rescue Plan Act of 2021 (“ARPA”) into law on March 11, 2021, which partially funds the Restaurant Revitalization Fund (“RRF”) with $28.6 billion for restaurants and bars with grants equal to their COVID-19 losses. The Small Business Administration (“SBA”) will administer the program and began receiving applications on Monday, May 3, 2021, at noon ET.

To qualify for funding, applicants must prove revenue losses attributed to the pandemic, which are calculated by subtracting 2020 gross receipts from 2019 gross receipts.  The maximum grant size will be $5 million for restaurants and $10 million for restaurant groups. Grant funds will not be taxed like income. The SBA has issued guidance on how to calculate pandemic-related losses in revenue. It is advisable that food business operators work closely with their accountants and other advisors when gathering the information needed for these calculations. However, the calculation can be simplified to:

Grant Fund = Eligible Expenses Incurred – Gross Receipts – PPP Loans

Businesses should have the following documents on hand:

  • Business tax returns and bank statements
  • Financial statements such as Income Statements or Profit and Loss Statements
  • Point of sale report(s)
  • Business organizational documents (articles of incorporation, operating agreements, etc.)
  • Loan documents on Paycheck Protection Program (“PPP”) loans (RRF funding issued will be reduced by the total amount of PPP loans)
  • Note that some businesses may need additional documents.

 Who can apply?

Most American restaurants and bars that lost revenue in 2020 when compared to 2019 will be eligible to apply for RRF grants. 

The ARPA explicitly names “eligible entities” who have experienced COVID-19 related revenue losses:

  • Restaurants, taverns, bars, food stands, food trucks, food carts, caterers, bakeries, saloons, and lounges.
  • Brewpubs, tasting rooms, taprooms,  breweries and/or microbreweries.
  • Licensed facilities or premises of a beverage alcohol producer where the public may taste, sample, or purchase products, or other similar places of business in which the public or patrons assemble for the primary purpose of being served food or drinks.

Most restaurants and bars will qualify as “eligible entities” if they don’t have more than twenty locations and are not publicly traded.

What can the grant be used for?

Funds may be used for the following expenses:

  • Business food and beverage expenses (including raw materials)
  • Business payroll costs.
  • Business operating expenses.
  • Construction of outdoor seating.
  • Business debt service (both principal and interest)
  • Payments of interest or principal towards any business mortgage obligation.
  • Supplies, including PPE and cleaning materials.
  • Business maintenance expenses.
  • Food and beverage inventory.
  • Covered supplier costs.
  • Rent payments, including rent under a lease agreement (not prepayment of rent)
  • Operational expenses.
  • Business utility payments.
  • Paid sick leave.

For more information and how to apply for the grant:

Details can be accessed at:
https://www.sba.gov/funding-programs/loans/covid-19-relief-options/restaurant-revitalization-fund 

Sample RRF application:
SBA Form 3172 Restaurant Revitalization Funding Application (Sample only)

Once the link goes live, the application will be available at:
https://restaurants.sba.gov

At this time, it is believed that the funding for the RRF is not enough to meet the demand of the industry. As a result, many eligible applicants may not receive the grant.

Dates:
Registration for the SBA application portal began on Friday, April 30, 2021, at 9 am ET. The application window will open on Monday, May 3, 2021, at noon ET.

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