Starting Friday, April 30 the U.S. Small Business Administration (SBA) will open registration for restaurants for the Restaurant Revitalization Fund (RRF).  Applications may be submitted Monday, May 3, 2021.

What is the RRF?

On March 11, 2021, the U.S. Small Business Administration announced details regarding the $28.6 billion Restaurant Revitalization Fund (RRF) created to help businesses recover from the economic downturn caused by the pandemic. Established by the American Rescue Plan Act (ARPA), the RRF will provide restaurants with debt-free support equal to their pandemic-related revenue loss up to $10 million per business and no more than $5 million per physical location. Recipients are not required to repay the funding as long as funds are used by March 11, 2023.

Who is Eligible?

• Restaurants
• Food stands, food trucks, food carts
• Caterers
• Bars, saloons, lounges, taverns
• Snack and nonalcoholic beverage bars
• Licensed facilities or premises of a beverage alcohol producer where the public may taste, sample, or purchase products
• Other similar places of business in which the public or patrons assemble for the primary purpose of being served food or drink
• Bakeries *
• Brewpubs, tasting rooms, taprooms *
• Breweries and/or microbreweries *
• Wineries and distilleries *
• Inns **
• * Bakeries, brewpubs, tasting rooms, taprooms, breweries, microbreweries, wineries, and distilleries: In order to be eligible, these businesses must provide documentation with their application that on-site sales to the public comprised at least 33% of gross receipts in 2019. For businesses that opened in 2020 or that have not yet opened, the Applicant’s original business model should have contemplated at least 33% of gross receipts in on-site sales to the public
• **Inns: To be eligible, these businesses must provide documentation with their application that on-site sales of food and beverage to the public comprised at least 33% of gross receipts in 2019. For businesses that opened in 2020 or that have not yet opened, the Applicant’s original business model should have contemplated at least 33% of gross receipts in on-site food and beverage sales to the public.
• Businesses must be open, temporarily closed, or opening soon (with expenses incurred as of March 11, 2021).
• Must have a Valid Business Tax ID Number (EIN, SSN, or ITIN).
• Eligible entities must not have filed for bankruptcy or are operating under an approved plan of reorganization.
• Did NOT Apply for Shuttered Venue Operators Grant or was Denied a Shuttered Venues Operators Grant
• Grant Amount Limitations:
• SBA may provide funding of up to $5,000,000 per location (not to exceed $10,000,000 total for the Applicant and any affiliated businesses) for Applicants who meet eligibility requirements.
• The minimum funding amount will be $1,000

Eligible Uses of Funds?

• Payroll Costs
• Business Mortgage Obligations (P & I)
• Business Rent
• Business Debt Service (P & I)
• Utilities
• Business Maintenance Expense
• Construction of Outdoor Seating
• Business Supplies, including protective equipment and cleaning materials
• Business Food and Beverage Expenses
• Covered Supplier Costs

Use of Funds

• Timeframe for using the funds
• Awardees must use all Restaurant Revitalization funds by March 11, 2023, on eligible expenses incurred beginning on February 15, 2020, and ending on March 11, 2023.
• Use of Fund Validation

All Applicants have until March 11, 2023, to use award funds. Not later than December 31, 2021, all Applicants are required to report through the application portal how much of their award has been used against each eligible use category. If the Applicant fully expends their funds prior to December 31, 2021, they will be asked to certify in the application portal that proceeds have been used on eligible expenses. All Applicants that do not fully expend award funds prior to December 31, 2021, will be required to complete annual reporting submissions until they fully expend the award funding or the period of performance expires. SBA reserves the right to request supplemental documentation needed to validate the certification.

Calculating Funding Amount

• Calculation 1 Applicants that were in operation (making sales) prior to or on January 1, 2019:
• Step A: Take Gross Receipts as reported on the eligible entity’s 2019 Federal Tax Return
• Step B: Subtract 2020 gross receipts as reported or to be reported on the eligible entity’s 2020 Federal tax return
• Step C: Subtract the aggregate original disbursement amount(s) of any PPP loan (First Draw PPP Loan and Second Draw PPP Loan) received, regardless of whether received in 2020 or 2021. Do not include any amount that you repaid on or before May 18, 2020, in accordance with PPP safe harbor rules.
• Calculation 2 Applicants that began operations (making sales) partially through 2019
• Step A: Calculate your annualized 2019 gross receipts
• Begin with gross sales on the tax return and annualize.
• Step B: Subtract 2020 gross receipts as reported or to be reported on the eligible entity’s 2020 Federal tax return
• Step C: Subtract the aggregate original disbursement amount(s) of any PPP loan (First Draw PPP Loan and Second Draw PPP Loan) received, regardless of whether received in 2020 or 2021.
• Calculation 3 Applicants that began operations (making sales) on or between January 1, 2020, and March 10, 2021; and Applicants that have not yet opened for sales but as of March 11, 2021, have incurred eligible expenses:
• Step A: Start with the total amount you spent on eligible expenses incurred on or between February 15, 2020, and March 11, 2021
• Step B: Subtract 2020 & 2021 (through 03/21/21) gross receipts as reported or to be reported on the eligible entity’s Federal tax return
• Step C: Subtract the aggregate original disbursement amount(s) of any PPP loan (First Draw PPP Loan and Second Draw PPP Loan) received, regardless of whether received in 2020 or 2021.

We will continue to provide additional updates for these programs. There is a lot of available information to assist business owners experiencing pandemic-related financial difficulties in learning about options and getting assistance. Contact us today to help you calculate your RRF amount.

By Jason Humienny

Jason Humienny is a Consulting Manager with Wilke & Associates. His previous experience includes being an assistant controller and has a strong background in property accounting and leading software implementation.