Small Business Administration Announces Details of Restaurant Revitalization Fund
The U.S. Small Business Administration (SBA) announced details of the Restaurant Revitalization Fund (RRF), the $28.6 billion relief program established by the American Rescue Plan Act, P.L. 117-2. The RRF will award grants of up to $5 million per physical location, capped at $10 million per entity and affiliates, to eligible entities that have experienced pandemic-related revenue loss.
Eligible entities that have experienced pandemic-related revenue loss include:
- Restaurants
- Food stands, food trucks and food carts
- Caterers
- 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 percent of gross receipts
- Inns at which on-site sales of food and beverages to the public comprise at least 33 percent of gross receipts
- Licensed facilities or premises of a beverage alcohol producer where the public may taste, sample or purchase products
The application portal will be tested in a 7-day pilot period. Following the pilot, the portal will be opened to the public. All eligible applicants will be able to submit applications as soon as the portal opens. The SBA plans to announce the official launch date at a later date.
During the first 21 days of the application period, the SBA will only process and fund applications where the applicant has self-certified it meets the eligibility requirements for a small business at least 51 percent owned by women, veterans or socially and economically disadvantaged individuals.
Socially disadvantaged individuals are defined as those who have been subjected to racial or ethnic prejudice or cultural bias because of their identity as a member of a group without regard to their individual qualities. Economically disadvantaged individuals are defined as socially disadvantaged individuals whose ability to compete in the free enterprise system has been impaired due to diminished capital and credit opportunities compared with others in the same business area who are not socially disadvantaged.
Eligible businesses can apply through SBA-recognized third-party point-of-sale vendors or directly through the SBA portal. Registration with SAM.gov is not required, and DUNS or CAGE identifiers are not required. A sample application form is available on the SBA website. Although the form will be completed online, the SBA requests businesses not submit forms at this time.
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. This form may be completed on the SBA platform.
For gross receipts and eligible expenses documentation, any of the following documents may be submitted:
- Business tax returns (IRS Form 1120, U.S. Corporation Income Tax Return or IRS Form 1120-S, U.S. Income Tax Return for an S Corporation)
- IRS Forms 1040, U.S. Individual Income Tax Return, Schedule C, Profit or Loss From Business; IRS Forms 1040, Schedule F, Profit or Loss From Farming
- For a partnership, the partnership’s IRS Form 1065, U.S. Return of Partnership Income (including Forms K-1, Partner’s Share of Income, Deductions, Credits, etc.)
- Bank statements
- Externally or internally prepared financial statements such as income statements or profit-and-loss statements
- Point-of-sale reports including IRS Form 1099-K, Payment Card and Third Party Network Transactions
Eligible brewpubs, tasting rooms, taprooms, breweries, wineries, distilleries and bakeries will need to provide documents showing on-site sales to the public comprised at least 33 percent of gross receipts for 2019. This may include Tax and Trade Bureau Forms 5130.9 or TTB. Eligible inns will also need to provide documents showing on-site sales of food and beverage to the public comprised at least 33 percent of gross receipts for 2019. For businesses of these types that opened in 2020, the applicant’s original business model should have contemplated at least 33 percent of gross receipts in on-site sales to the public.
The RRF includes $5 billion set aside for applicants with 2019 gross receipts of $500,000 or less, $4 billion set aside for applicants with 2019 gross receipts from $500,000 to $1.5 million, and $500 million set aside for applicants with 2019 gross receipts of $50,000 or less.
Calculations for payment are:
- Calculation 1 - For applicants in operation before or on Jan. 1, 2019: 2019 gross receipts minus 2020 gross receipts minus Paycheck Protection Program (PPP) loan amounts.
- Calculation 2 - For applicants that began operations partially through 2019: (Average 2019 monthly gross receipts times 12) minus 2020 gross receipts minus PPP loan amounts.
- Calculation 3 - For applicants that began operations on or between Jan. 1, 2020, and March 10, 2021, 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.
Entities that began operations partially through 2019 may elect to use either Calculation 2 or Calculation 3.
Funds may be used for expenses including:
- 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
For purposes of the RRF, 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.