Let’s Talk About The Restaurant Revitalization Fund

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  • Contributors:
  • Trace Bauman
Business owner reopening a restaurant after receiving a Restaurant Revitalization Fund grant

Covid-19 has hit my restaurant hardWhat do I need to know about the Restaurant Revitalization Fund? 

The American Rescue Plan Act of 2021 created the Restaurant Revitalization Fund – a $28.6 billion grant program to relieve restaurants from the losses they experienced due to the Covid-19 pandemic. If you’re a restaurant owner looking for financial support to keep your business running, you’ve come to the right place. Fortunately, this grant program is exclusive to members of the restaurant industry, has funds set aside for the hardest-hit businesses, and is simpler than the Paycheck Protection Program 

This article answers all your questions about the Restaurant Revitalization Fund (RRF) program, including:

  1. Am I eligible for an RRF grant?
  2. What might disqualify my business from receiving a grant?
  3. When can I apply?
  4. Where do I apply?
  5. Is there anything I can do to prepare for the application?
  6. How much money will I receive from the Restaurant Revitalization Fund? How much will my grant be?
  7. What do I have to do with the grant money?
  8. How much grant money does the SBA have to give? How much is left?

Click any of the items listed above to jump to that section. 

 

1. Am I eligible for an RRF grant? 

If you’re a restaurant and lost revenue in 2020 compared to 2019, yes. There’s a good chance you’re eligible for an RRF grant. Here’s a complete list of the types of food and drinking places that are eligible for a grant: 

  • Restaurants 
  • Food stands, food trucks, and food carts 
  • Caterers 
  • Bars, saloons, lounges, and taverns 
  • Snack and nonalcoholic beverage bars
  • Bakeries (onsite sales to the public are at least 33% of gross receipts)
  • Inns (onsite sales to the public are at least 33% of gross receipts)
  • Brewpubs, tasting rooms, and taprooms (onsite sales to the public are at least 33% of gross receipts) 
  • Breweries and microbreweries (onsite sales to the public are at least 33% of gross receipts) 
  • Wineries and distilleries (onsite sales to the public are at least 33% of gross receipts) 
  • Licensed facilities of a beverage alcohol producer where the public may taste, sample, or purchase products 

If you run a similar place of business where people gather for the primary purpose of being served food or drink, you’re eligible for an RRF grant. Also, if your place of business is tribally owned or located in an airport terminal, you’re eligible.  

 

2. What might disqualify my business from receiving a grant?

Your business may be an eligible entity, but some circumstances may prevent you from receiving an RRF grant. Your business isn’t eligible for a grant if: 

  • It has a pending application for or received a grant for shuttered venue operators
    • If the application was denied, you can apply for an RRF grant. 
  • It’s operated by a state or local government
  • It’s part of a publicly traded company
  • The business has more than 20 locations as of March 13, 2020 
    • This applies to affiliated businesses
    • Affiliated business: a business in which an eligible entity has an equity or right to profit distributions of 50% or more, or in which an eligible entity has the contractual authority to control the direction of the business, provided that this affiliation was in place as of March 13, 2020. 
  • It has permanently closed

 

3. When can I apply?

Applications open on Monday, May 3, 2021, at noon ET. Before applying, the SBA recommends you register for an account starting Friday, April 30 at 9 a.m. ET. You can register for an account at restaurants.sba.gov. If you work with Square or Toast, you don’t need to register. 

The American Rescue Plan Act requires the SBA to prioritize businesses owned and operated by women, veterans, or socially and economically disadvantaged individuals in the first 21 days of the grant program. This is the priority period. During these first 21 days, the SBA will accept applications from all eligible applicants. However, it will only process and distribute grants to these priority groups.

After the priority period, the SBA will accept applications from all eligible applicants and process applications in the order they’re approved. The application portal will remain open until funds are gone.

 

4. Where do I apply?

You can apply for a grant through the SBA or an SBA-recognized point of sale restaurant partner. When the SBA’s application portal opens on May 3, you can apply here

 

5. Is there anything I can do to prepare for the application?

Yes! If you want to get a head start on your application, the SBA recommends reviewing the sample application form, program guide, and cross-program eligibility chart on SBA COVID-19 relief options. In addition, the SBA hosted training sessions that are available on SBA’s YouTube channel

You’ll also want to:

  • Calculate your gross receipts in 2019 and 2020 
  • Total the expenses spent before opening 
  • Calculate expenses incurred after opening 
  • Note your PPP loan amount(s)

As you’ll find in the next section, the SBA will use some of this information to calculate your grant amount.  You should also begin gathering the required documentation. This may include:

  • IRS Form 4506-T completed and signed
    • You can also complete this form digitally on the SBA platform.
  • Gross receipts documentation, which may include:
    • Business tax returns (IRS Form 1120/Form 1120-S)
    • IRS Form 1040 and Schedule C/Schedule F
    • IRS Form 1065 and Schedule K-1
    • Bank statements
    • Externally or internally prepared financial statements (income statements or profit and loss statements)
    • Point of sale reports, including IRS Form 1099-K
  • If onsite sales must comprise at least 33% of your company’s gross receipts, gather documents to prove your business meets this threshold.

When you apply, the SBA will require you to make a good-faith certification that the uncertainty of the current economic conditions makes it necessary to make this request and support your ongoing operations. Plus, you’ll have to confirm your eligibility and self-certify that you haven’t applied for or received a shuttered venue operator grant. 

 

6. How much money will I receive from the Restaurant Revitalization Fund? How much will my grant be?

Your grant amount will equal your pandemic-related revenue lossThere are a few methods to calculate your pandemic-related revenue lossBefore we start, you’ll need to know the definition of gross receipts. 

Gross receipts: total business revenue received from all sources without subtracting costs or expenses. For this program, gross receipts don’t include your PPP loan amount (first or second draw), EIDL amounts, EIDL or Targeted EIDL Advances, state and local grants, or SBA Section 1112 payments.  

The most straightforward calculation is calculating your gross receipts in 2019 and subtracting your 2020 gross receipts from that number. If the total is more than $0, that’s your pandemic-related revenue loss and the grant amount you’ll receive from the SBA.  If you received a first draw or second draw PPP loan in 2020 or 2021, your grant amount will be reduced by your PPP loan amount(s). 

Calculate your RRF grant amount

Below are all possible calculation methods based on various business scenarios. Select the scenario that best applies to you. Enter the values for expenses, gross receipts, and your PPP loan(s) to calculate your potential RRF grant amount. If the total is less than $0, you may not qualify for a grant.

1. If your business was in operations on or before Jan. 1, 2019, your loss formula is:

2019 gross receipts – 2020 gross receipts – PPP loan = grant amount

RRF Grant #1

$

2. If your business wasn’t operating for all of 2019, your loss formula is: 

(Average 2019 monthly gross receipts x 12) – 2020 monthly gross receipts – PPP loan = grant amount 

RRF Grant #2

$

3. If your business opened between Jan. 1, 2020, and March 10, 2021, your loss formula may be: 

One of the two calculation methods listed above, or…

Eligible expenses incurred between Feb. 15, 2020 and March 11, 2020 – 2020 gross receipts – PPP loan = grant amount 

RRF Grant #3

$

4. If your business hasn’t opened by the date of your grant application but has incurred expenses, your loss formula is: 

Eligible expenses incurred between Feb. 15, 2020 and March 11, 2020 – 2020 gross receipts – PPP loan = grant amount 

RRF Grant #4

$

 

Grant amounts are limited. If you’re part of a restaurant group, the grant amount for the group can’t exceed $10 million. Individual restaurants can receive up to $5 million. Each eligible applicant will receive a minimum grant of $1,000. If you receive an RRF grant, it’s not taxed as regular income.  

 

7. What do I have to do with the grant money? 

You can use your grant funds to pay expenses incurred between Feb 15. 2020 and March 11, 2023. Eligible expenses include the following: 

  • Payroll costs 
  • Payments of principal or interest on any mortgage obligation 
    • Prepayments aren’t allowed 
  • Rent payments, including rent under a lease agreement  
    • Prepayments aren’t allowed 
  • Utilities 
  • Maintenance expenses, including: 
    • Construction to accommodate outdoor seating 
    • Walls, floors, deck surfaces, furniture, fixtures, and equipment 
  • Supplies, including protective equipment and cleaning materials 
  • Food and beverage expenses within the scope of your normal business practice, including raw materials
  • Covered supplier costs 
    • Payments made to a supplier for the supply of goods that are essential to the entity’s operations at the time the payment was made. The contract or purchase order must have been in effect before the grant’s covered period.  
  • Operational expenses 
  • Paid sick leave 
  • Any other expenses the SBA determines are essential to maintain the business 

If you think this sounds like a PPP loan, you’re not far off. But, the key difference is that this is a grant, not a loan. You don’t have to pay it back or apply for forgiveness later. You’re not required to use a percentage of the grant funds on certain expenses. And if you don’t spend all the grant money by March 11, 2023, you return the unused amount to the Treasury Department.

  

8. How much grant money does the SBA have to give? How much is left?

The SBA has $28.6 billion in RRF grants to distribute; $5 billion is earmarked for entities with gross receipts of $500,000 or less in 2019. Another $4 billion is set aside for applicants with 2019 gross receipts between $500,001 and $1.5 million. Finally, $500 million is set aside for businesses with 2019 gross receipts under $50,000.

The American Rescue Plan Act intends to distribute funds to those who have been hit hardest by Covid-19 Because the SBA hasn’t opened the program to applicants, all $28.6 billion is available. 

Originally published 4/13/2021. Updated 5/12/2021.

 

Additional Resources

 

If you have questions about the Restaurant Revitalization Fund, let’s talk! 

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