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SBA Releases Guidance on Restaurant Revitalization Fund

waiter in protective mask sets a table

On Friday, April 16, the SBA released much anticipated guidance on the Restaurant Revitalization Fund (RRF) in the form of a program guide and a sample application, Form 3172

Who is Eligible?

The guidance confirmed the list of eligible entities not subject to additional thresholds:

  • Restaurants,
  • Food stands, trucks, and carts,
  • Caterers
  • Bars, saloons, lounges, and taverns,
  • Snack and nonalcoholic beverage bars.

The guidance also clarified that some entities will be required to meet a gross receipts test to be eligible.  The following entities will need to provide proof that they had onsite sales to the public in 2019 that comprise at least 33% of their total gross receipts. 

  • Bakeries,
  • Brewpups, tasting rooms, and taprooms,
  • Breweries and microbreweries,
  • Wineries and distilleries,
  • Inns.

Nonprofit organizations and publicly traded companies are among the list of ineligible grant recipients.  If an entity, together with its affiliates, owns and operates more than 20 locations, they will also be ineligible for funding.  Entities that have permanently closed, filed a Chapter 7 bankruptcy, or filed a Chapter 11, 12, or 13 bankruptcy but are not operating are also ineligible.

What is the Application Process?

While applications are not yet open, the SBA has provided information on how potential applicants will be able to apply.  The SBA is currently working with point-of-sale (POS) restaurant partners to develop portals through the POS vendor website to make applying for the grant easy for those POS users.  If the entity does not work with a POS restaurant partner or uses a variety of systems to generate sales, they will also have the ability to apply directly through the portal or via telephone. 

In addition to the application linked above, applicants will also be required to provide the following documentation:

  • IRS Form 4506-T, Request for Transcript of Tax Return
  • Business tax returns (IRS Form 1065, 1120, or 1120S) or IRS Forms 1040 Schedule C
  • Bank statements
  • Financial statements
  • Point of sale (POS) reports, including IRS Form 1099-K
  • Evidence of 33% gross receipts test for those entities that require additional eligibility thresholds.

How Much Money Can I Get?

The grant amount will be calculated by using the following formula:

  • 2019 gross receipts minus 2020 gross receipts minus any PPP loans received.

If your business was not in operation for all of 2019, you are able to annualize your 2019 gross receipts and use the same calculation above.

If your business began operations between January 1, 2020 and March 10, 2021, or you are not yet open but have incurred eligible expenses, you are still potentially eligible for funding.  The calculation for businesses that fall into this category is:

  • Amount spent on eligible expenses between February 15, 2020 and March 11, 2021 minus 2020 gross receipts minus any PPP loans received.

If the grant amount you are requesting is less than $1,000, you are not eligible for funding.  The maximum grant amount entities are eligible to receive is $5 million per location, capped at $10 million in total for an applicant and their affiliated businesses.

When Will I Receive Funds?

The SBA has noted that it will likely take approximately 14 days from the opening of the program for funding to begin.  All applicants will be able to submit applications once the portal is open, however, the first priority group to receive funding will be businesses owned at least 51% by women, veterans, or socially and economically disadvantaged individuals.  Business owners will need to have a commercial bank account owned by the business in existence for funds to be deposited into. 

What Are Eligible Expenses?

The RRF grant can be used on most ordinary and necessary business expenses, including payroll, mortgage, rent, loan payments, utilities, supplies, raw materials, supplier costs and other operating expenses.  The money cannot be used for prepayments of rent, mortgage, or debt service costs.  Entities can use the funds to cover costs incurred between February 15, 2020 and March 11, 2023.  Any unused funds at the end of this period must be returned.  If an entity permanently closes prior to March 11, 2023, the ‘covered period’ will be deemed to have ended on the day the entity closes.

What Kind of Reporting is Needed?

Entities will need to report their use of funds on an annual basis at the end of each calendar year through the application portal. 

Join us for a webinar on Tuesday, April 27th as we take a closer look at the details of the program and the draft application.

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