This article is only for educational purposes and does not constitute legal, financial, or tax advice. Make sure you consult a professional regarding your unique business needs.
Restaurants and food service businesses have had to adapt during the COVID-19 pandemic. Indeed, many of them reorganized their offerings to take pandemic restrictions into account. With those starting to end, and as restaurants start to focus on recovery, the [Restaurant Revitalization Fund] (RRF)(https://www.sba.gov/funding-programs/loans/covid-19-relief-options/restaurant-revitalization-fund) offers a lifeline. THE RRF is part of the U.S. American Rescue Plan Act of 2021. This plan includes a $28.6 billion fund for awards to eligible businesses affected by the pandemic to help them stay open. The Restaurant Revitalization Fund is administered by the Small Business Association (SBA), but unlike the Paycheck Protection Program (PPP), it is not a loan.
How is the RRF grant calculated?
The SBA’s Restaurant Revitalization Fund calculator uses three calculation tables:
- Calculation 1: businesses operating before January 1, 2019
- Calculation 2: businesses operating during 2019
- Calculation 3: businesses operating January 2020–March 2021 AND businesses not yet open but with expenses incurred
Calculation one, for businesses operating before January 1, 2019, is 2019 gross receipts minus 2020 gross receipts minus PPP loan amounts.
Calculation two, for businesses operating during 2019, is average 2019 monthly gross receipts x 12 minus 2020 gross receipts minus PPP loan amounts.
For businesses operating January 2020–March 2021 AND businesses not yet open but with expenses incurred, calculation three is the amount spent on eligible expenses between February 15, 2020, and March 11, 2021, minus 2020 gross receipts minus 2021 gross receipts (through March 11, 2021) minus PPP loan amounts.
The SBA has advised that businesses that began operations partway through 2019 may use either calculation two or calculation three, at their discretion. The RRF Program Guide gives more details of the calculations.
The SBA may award up to $5 million per location, and no more than $10 million per applicant and affiliated businesses. The minimum possible award is $1,000. All funds must be used by March 11, 2023.
What can I use the RRF money for?
Funds from the Restaurant Revitalization Fund must be used on business-related expenses, including payroll costs, rent, mortgage, debt service, utilities, food and beverage expenses, maintenance expenses, construction of outdoor seating, supplies, covered supplier costs, and operating expenses.
Is my business eligible for the RRF?
Apart from restaurants, according to the SBA Restaurant Revitalization Fund guidance, eligible businesses include:
- Bars, saloons, lounges, taverns
- Food stands, food trucks, food carts
- Licensed favilities or premises of a beverage alcohol producer where the public may taste, sample, or purchase products
- Snack and non-alcoholic beverage bars
- Inns, bakeries, wineries, distilleries, breweries, brewpubs, tasting rooms, and taprooms are also eligible, provided that onsite sales to the public represent at least 33% of gross receipts.
What documentation do I need for my RRF application?
To complete your Restaurant Revitalization Fund application, you’ll need a range of documentation. For example, you’ll need to verify your tax information with a completed and signed IRS Form 4506-T, which you can complete on the SBA site. Note that you don’t have to have filed your 2020 tax return to be eligible to apply.
You’ll also need docusmentaion to prove your gross receipts and, if required, eligible expenses. Appropriate documentation includes:
- Bank statements
- Income statements or profit and loss statements
- Business tax returns and IRS forms (including Form 1120 or IRS 1120-S, and 1040 schedules C and F)
- IRS forms relating to partnerships
- Point-of-sale report(s), including IRS Form 1099-K
For applicants running brewpubs, tasting rooms, taprooms, breweries, wineries, distilleries, or bakeries, you’ll need to show evidence that onsite sales to the public represent at least 33% of gross receipts for 2019. This may include Tax and Trade Bureau (TTB) Forms 5130.9 or TTB.
For businesses in these categories that opened in 2020, the planned business model should project at least 33% of gross receipts in onsite sales to the public.
Applicants running inns will also need to show documentation that onsite sales of food and beverages to the public represent at least 33% of gross receipts for 2019. And similarly, if the inn opened in 2020, the original business model should project at least 33% of gross receipts in onsite sales to the public.
How to apply for the SBA Restaurant Revitalization Fund
There are two ways to submit your Restaurant Revitalization Fund application:
- The SBA has an online application portal available. Depending on application volume, the portal is sometimes closed, so check back if it is.
- You can also apply via Square, which is an SBA-recognized point-of-sale vendor.
Here’s what you need to do to apply for the Restaurant Revitalization Fund award through Square:
- You’ll need to have processing data for at least part of 2019 and 2020 available through your Square account.
- If you’re eligible, you’ll see a module on your online Square Dashboard, which prompts you to start your application. If you apply via Square, you don’t have to register with the SBA portal.
- Once you have submitted your application via Square, you’ll get an email prompting you to digitally sign your application on the SBA portal. If you need additional documentation, you’ll be able to upload it at this time.
Note that if you started processing with Square in 2020 or 2021, you won’t see an application prompt on your Dashboard, as we won’t be able to support your application. Instead, we recommend you apply through the SBA portal.
You don’t need Dun & Bradstreet Numbers (DUNS) or Commercial and Government Entity (CAGE) codes, which are unique business identifiers, for your application.
What happens after I submit my RRF application?
The SBA will start by reviewing RRF applications from priority groups within the first 21 days of submission. Non-priority groups will be reviewed thereafter. Once an application is submitted successfully, the SBA will validate it via IRS verification, which can take up to seven days.
Priority groups include businesses that are at least 51% owned by women, veterans, or socially or economically disadvantaged people. According to the SBA Restaurant Revitalization Fund guidance, socially disadvantaged people are those subjected to racial or ethnic prejudice or cultural bias because of their identity. Economically disadvantaged people are socially disadvantaged people who have fewer capital and credit opportunities, making it harder for them to compete in the business world.
The SBA Restaurant Revitalization Fund also includes “set-asides” for businesses in certain income categories. These are:
- $5 billion for applicants with 2019 gross receipts of not more than $500,000
- $4 billion for applicants with 2019 gross receipts from $500,001 to $1,500,000
- $500 million for applicants with 2019 gross receipts of not more than $50,000
With many food and beverage businesses affected by the COVID-19 pandemic downturn, the SBA Restaurant Revitalization Fund offers a much-needed lifeline. If you meet the eligibility criteria, apply through your Square Dashboard so you can get back to doing business.