This blog post was originally published on March 11, 2021 and was most recently updated on May 18, 2021.
Latest: On May 18, the U.S. Small Business Administration (SBA) announced that eligible eating establishments have until Monday, May 24, 8 p.m. ET to submit applications to the Restaurant Revitalization Fund.
The SBA began registrations on Friday, April 30, 2021, at 9 a.m. EDT and opened applications on Monday, May 3, 2021, at noon EDT for the Restaurant Revitalization Fund.
For the first 21 days, the SBA prioritized funding applications from businesses owned and controlled by women, veterans, and socially and economically disadvantaged individuals. Following the 21 days, all eligible applications will be funded on a first-come, first-served basis.
Details on Restaurant Revitalization Fund (RRF) grant application requirements, eligibility, and a program guide are now available in English at www.sba.gov/restaurants and in Spanish at www.sba.gov/restaurantes. Restaurant365 is closely monitoring news from the federal government on the RRF and will update this blog post as the SBA releases new information.
The passage of the $1.9 trillion American Rescue Plan created the $28.6 billion Restaurant Revitalization Fund (RRF). The RRF is earmarked for the restaurant industry in the form of tax-free grants of up to $5 million for individual restaurants and $10 million for restaurant groups with 20 or fewer locations. After the American Rescue Plan was voted on initially by the House on March 1, the Senate increased the amount of money for the Restaurant Revitalization Fund from the initially proposed $25 billion to $28.6 billion.
The Restaurant Revitalization Fund is modeled after the $120 billion RESTAURANTS Act, which was introduced in Congress in June 2020 and passed by the House but was not voted on by the Senate. The financial relief, which is aimed at saving restaurants, bars, and jobs, was a key objective of lobbying by the National Restaurant Association (NRA) and the Independent Restaurant Coalition.
The Small Business Administration (SBA) will administer the Restaurant Revitalization Fund and is likely to begin processing restaurant grant applications “within weeks, not months,” according to Rep. Earl Blumenauer (D- Or.). He said that $28.6 billion “won’t be enough” to help small businesses recover and the fund may need a second round, similarly to the Paycheck Protection Program (PPP). Still, independent restaurants are hoping that the grants will be a light at the end of the long and dark pandemic tunnel.
The eligibility amount will be determined by subtracting an applicant’s 2020 sales from its 2019 revenues, with the goal of compensating the business for what was lost during shut down and while diners were advised to stay home.
The SBA has not yet announced an exact date to begin accepting grant applications, nor has it provided the details of the grant application process, however, the SBA is targeting early April to launch a phased rollout of the fund. This blog post will be continually updated to reflect the most recent and accurate information from the SBA.
The grants may be used alongside any government disaster loans and Employee Tax Retention Tax Credits (ERTC) that a restaurant business has received since the beginning of the COVID-19 pandemic. However, a relief grant and an ERTC cannot be used for the same expenses. Also, if a restaurant received a PPP loan, the amount of the PPP loan will be subtracted from the eligible grant total received from the Restaurant Revitalization Fund. Any unused grant money must be returned to the federal government.
Latest Restaurant Revitalization Fund Updates
- Details on application requirements, eligibility, and a program guide are now available in English at www.sba.gov/restaurants and in Spanish at www.sba.gov/restaurantes.
- As of May 12, 2021, the RRF has received more than 147,000 applications from women, veterans, and socially and economically disadvantaged business owners, requesting a total of $29 billion in relief funds.
- As of May 6, 2021, the SBA announced that it had received more than 186,000 RRF grant applications from restaurants and other food and beverage businesses in all 50 states, the District of Columbia, and five U.S. Territories.
- 97,600 applications came from restaurants, bars, and other eligible businesses owned and controlled by women (46,400), veterans (4,200), socially and economically disadvantaged individuals (30,800), or some combination of the three (16,200).
- 61,700 applications came from businesses with under $500,000 in annual pre-pandemic revenue, representing some of the smallest restaurants and bars in America.
- The statute currently sets aside $5 billion for applicants with 2019 gross receipts of $500,000 or less, and $500 million in grants for very small restaurants whose gross receipts do not exceed $50,000. Also, $4 billion is set aside for applicants with gross receipts in 2019 between $500,000 and $1.5 million.
- Applications are able to synch with selected POS systems. Participating POS providers include Square, Toast, Clover, NCR Corporation (Aloha), and Oracle.
SBA Recommendations on How to Prepare
In preparation for applying for an RRF grant, the SBA recommends that eligible applicants (see Eligibility below) familiarize themselves with the application process in advance to facilitate an efficient application experience. Specifically, qualifying applicants should do the following in advance of applying for a grant:
- Register for an account in advance at sba.gov.
- Review the official guidance, including program guide, frequently asked questions, and application sample.
- Prepare the required documentation.
- Work with a point-of-sale vendor or visit sba.gov to submit an application. [Note: Applicants working with a point-of-sale vendor do not need to register beforehand on the site.]
- Watch a pre-recorded SBA webinar on how to apply.
All eligible applicants are encouraged to submit applications as soon as the portal opens on Monday, May 3, 2021, at noon EDT.
Highlights of the Restaurant Revitalization Fund
Individual restaurants and other food and drinking establishments, including caterers, brewpubs, taprooms, and tasting rooms, may apply for the grants. Key features of the fund include:
- Individual restaurants may apply for grants of up to $5 million.
- Restaurant groups with 20 or fewer locations may qualify for grants of up to $10 million.
- Franchisees of larger chains that do not own more than 20 locations are eligible to apply for grants of up to $10 million.
- Publicly traded restaurant groups are not eligible for the grants.
- Payroll (excluding employee compensation exceeding $100,000 per year)
- Employee benefits and paid sick leave
- Mortgage, rent, and utilities
- Outdoor seating construction; supplies, PPE, and cleaning materials
- Food, operational expenses, and debt obligation to suppliers
How is the Amount of the Grant Determined?
- The grant will equal 2019 revenues minus 2020 revenues for restaurants established prior to 2019.
- For restaurants that opened in 2019, the grant will equal the average of 2019 monthly revenues times 12, minus 2020 revenues.
- Restaurants that opened in 2020 will be eligible to receive funding equal to eligible expenses.
Covered Period and Set Asides
- Grants can be spent on eligible expenses from 2/15/20 through 12/31/21. The SBA Administrator may extend the period through two years from enactment if conditions warrant.
- $5 billion of the $28.6 billion total is reserved for restaurants with less than $500,000 in gross receipts in 2019 for the first 60 days of the program.
- During the initial 21-day period, the administrator will prioritize awarding grants to eligible entities that are owned or controlled by women, veterans or are socially and economically disadvantaged businesses.
Restaurants Applying for the Grants Must Certify That:
- Current economic conditions make the grant request necessary;
- Funds will be used appropriately;
- And they will only apply for and receive one grant.
The National Restaurant Association recently published an FAQ on the Restaurant Revitalization Fund that provides more details on the program.
This blog post has been prepared for informational purposes only, and is not intended to provide, and should not be relied on, for advice on applying for a grant. You should consult your own tax advisor or CPA if you have specific questions about how the Restaurant Revitalization Fund may affect your restaurant business.
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