Preparing to Apply for the Restaurant Revitalization Funding Grant
In review of 2020, the National Restaurant Association found that the industry ended the year $240 Billion below pre-pandemic forecasts of sales. Because of this outsized impact, restaurants have received additional industry specific funding from Congress as part of the American Rescue Plan Act to help get them closer to becoming whole. This grant will be available directly through the Small Business Administration. They just announced their “Go Live,” of the application portal found here.
Businesses That Are Eligible For The Restaurant Revitalization Fund Grant
Eligible entities can register for portal access starting Friday, April 30th, at 11 a.m. ET. The first applications can be submitted starting on Monday, May 3rd, at noon ET.
*Please note that the first 21 days of funding, priority application processing will be given to businesses owned at least 51% by women, veterans or socially and economically disadvantaged applicants.
Read the items below in order to be prepared for a smooth application process:
We recommend reviewing the chart that explains all cross eligibility of different funding programs on the SBA website, but here are the eligible entities:
- Food stands, food trucks, and food carts
- Bars, saloons, lounges, and taverns
- Snack and nonalcoholic beverage bars
- Bakeries, brewpubs, tasting rooms, taprooms, breweries, microbreweries, wineries, and distilleries at which on-site sales to the public comprise at least 33% of the gross receipts
- Inns at which on-site sales of food and beverages to the public comprise at least 33% of gross receipts
- Licensed facilities or premises of a beverage alcohol producer where the public may taste, sample, or purchase products
Using Funds Received From The Restaurant Revitalization Grant
There is much more flexibility on the use of funds for this grant program. Funds may be used for all the following expenses:
- Business payroll costs, including sick leave
- Payments on any business mortgage obligation
- Business rent payments, not including prepayment of rent
- Business debt service, both principal and interest, not including any prepayment of principal or interest
- Business utility payments
- Business maintenance expenses
- Construction of outdoor seating
- Business supplies, including protective equipment and cleaning materials
- Business food and beverage expenses, including raw materials
- Covered supplier costs
- Business operating expenses
How Restaurant Revitalization Grants Are Calculated
There are three separate calculation methods based on how long the restaurant has been in operation. This may help to address restaurants with openings after February 15th, 2020, who have had a harder time accessing funds via the Paycheck Protection Program. Here is a quick summary of the three methods:
Here is a quick summary of the three methods:
- For applicants in operation before or on Jan. 1, 2019
- Start with 2019 gross receipts, less, 2020 gross receipts, less Paycheck Protection Program (PPP) loan amounts (both 1 &2)
- For applicants that began operations partially through 2019
- Calculate the average 2019 monthly gross receipts, multiplied by 12, less 2020 gross receipts, less PPP loan amounts (both 1&2)
- For applicants that began operations on or between Jan. 1, 2020, and March 10, 2021, or that have not yet opened but have incurred eligible expenses
- Amount spent on eligible expenses between Feb. 15, 2020, and March 11, 2021, minus 2020 gross receipts minus PPP loan amounts (both 1&2)
Application amounts under $1000 will not be considered, and there is a funding cap of $5M per location and $10M per affiliated entity.
For purposes of this program, gross receipts do not include:
- Amounts received from first- or second-draw PPP loans
- Amounts received from Economic Injury Disaster Loans (EIDL)
- Advances on EIDL (EIDL Advance and Targeted EIDL Advance)
- State and local grants; or SBA Section 1112 payments.
Addressing Gross Receipts
We have not seen anything that addresses the inclusion or exclusion of sales tax. Thus, the thought is as long as the Gross Receipts comparison is “apples to apples” and ties to the tax returns, the application will be accepted.
How To Apply For A Restaurant Revitalization Grant
You can apply through SBA-recognized Point of Sale (POS) vendors including Square, Toast, Clover and NCR Corporation (Aloha), OR directly through the SBA using the online application portal. If an applicant is working with a POS vendor, they do not need to register beforehand on the application portal.
MRPR recommends reviewing and filling out the sample application linked below in order to submit at the earliest point possible.
A Sample Application has been provided by the SBA here.
Any of the following can be used to substantiate gross receipt calculations: Form 1120, Form 1120S, Form 1040, including Schedule C and/or Schedule F, Form 1065, including K-1’s, Bank Statements, externally or internally prepared financials statements, or point-of-sales reports including 1099-K reporting from credit card processors.
- To verify tax information, businesses will be required to submit IRS Form 4506-T, Request for Transcript of Tax Return, completed and signed by the applicant.
- Registration with SAM.gov is not required, and DUNS or CAGE identifiers are not necessary to apply for funding.
- There is a chart that explains all cross eligibility of different funding programs on the SBA website here.
- Two Examples of More Common Exclusions: If an entity has an outstanding PPP loan application at the time of the RRF application, the SBA has advised that the PPP application should be withdrawn to make the calculation of grant funds clear, OR if a potential applicant received an Shuttered Venue Operators Grant or has a pending application for an SVOG, they are ineligible for RRF. Once declined for the SVOG, the applicant may then be eligible for the RRF.
- Nonprofit organizations are not eligible for the RRF program.
- There will be an interim reporting requirement for the grant funds. The recipient would have until March 11, 2023, to spend the grant on eligible expenses, but each year, the SBA will require reporting via the fund portal on how much of the funds have been used on eligible expenses. This would continue until the expiration of the program or the funds have been fully used, at which time a “simple” online certification will be required to close out the award.
- As with all programs, SBA reserves the right to request additional documentation to validate the certification and use of funds
Topics: Business Planning & Operations