Restaurant Revitalization Fund – SBA Stimulus

03 May Restaurant Revitalization Fund – SBA Stimulus

Under the American Rescue Plan Act of 2021, eligible restaurants, food trucks, and similar businesses may receive restaurant revitalization funding from the Small Business Administration. Registration will begin on April 30th at 9 a.m. EDT, and the SBA will begin accepting applications via the application portal (see link below) on Monday, May 3rd at 12 p.m. EDT. The application portal will remain open until all funds are exhausted.

• SBA website for the Restaurant Revitalization Fund
• RRF Guide
• Sample Application
• SBA Restaurant Revitalization Award Portal

What is it? A $28.6 billion program providing cash grants to restaurants (including bars, breweries, caterers and food trucks) that experienced reduced revenue in 2020.

Who qualifies? An “eligible entity” is any business in which the public assembles to be served food and drink, including restaurants, food trucks, food carts, caterers, bars, and brewpubs. Gross receipts from 2020 must be lower than those in 2019 for a grant to be generated. Ineligible entities include those that:

• Had more than 20 restaurant locations (aggregated with affiliates) as of March 10, 2020, or
• Are publicly traded or NFPs
• Received a Shuttered Venues Operators Grant or have a pending application
• Filed Chapter 7 bankruptcy
• Filed Chapter 11, 12, 13 but is not operating
• Permanently closed

Bakeries, brewpubs, tasting rooms, taprooms, breweries/microbreweries, wineries/distilleries and inns must provide documentation that at least 33% of 2019 gross receipts represent on-site sales, or for those opened in 2020, have contemplated at least 33% of onsite sales. For this purpose, on-site sales for Inns must specifically represent food and beverage sales.

Grant recipients will need to make a good faith certification that the uncertainty of current economic conditions makes necessary the grant request to support the ongoing operations of the eligible entity, similar to PPP applications.

How much can I receive? Cash grants will equal the amount by which the recipient’s gross receipts decreased in 2020 as compared to 2019, minus the amount of any PPP loans received by the restaurant, but no lower than $1,000. The grant is capped $5 million per restaurant location, not to exceed $10 million for the applicant.

How is the funding calculated? There are 3 calculation methods that can be used, depending upon whether the applicant:

• was in operations (making sales) prior to or on January 1, 2019
• began operations (making sales) on or between January 1, 2020 and March 12, 2021
• has not yet opened for sales but as of March 11, 2021 have incurred eligible expenses.
• In all cases, PPP loan funds will reduce the RRF calculation.

How can I receive the funds? There are 3 ways to apply:

1. Through a recognized SBA Restaurant Partner
2. Through SBA directly at restaurants.sba.gov
3. Telephonically at (844)279-8898

How to prepare? In preparation, qualifying applicants should familiarize themselves with the application process in advance to ensure a smooth and efficient application. Follow the steps below.

• Register in advance for an account at restaurants.sba.gov starting Friday, April 30th at 9 a.m. EDT. If you are working with Square or Toast, you do not need to register beforehand on the application portal.
• Review the sample application, program guide and cross-program eligibility chart on SBA COVID-19 relief options.
• Attend the webinar training. A recorded version of the training is available on SBA’s YouTube Channel. The SBA will share the recording links via email an on SBA’s social media channels.

How can I use the funds? The grant can be spent on essentially all operating expenses that have been incurred as a result of, or during, the COVID-19 pandemic. Specific categories include payroll costs (definition borrowed from PPP), rent or mortgage payments, debt service, utilities, maintenance, construction of outdoor seating, supplies, food and beverage costs, certain supplier costs and other operational costs. Grant funds must be spent by March 11, 2023, or when the business closes, whichever is sooner.

How will this be taxed? The grant is excluded from gross income, and the business will be able to deduct expenses paid with grant funds from their gross income. Since these grants are treated as tax-exempt income, they will be allocated to the partners or shareholders and increase their basis in their partnership interests.

Need help and guidance with this? Below are great resources.

• The SBDC at USF is a SBA and Federally funded complimentary service that will provide you with a consultant for free. To register to speak to a local Tampa Area SBDC consultant, virtually, click here: SBDC – Schedule a Consultant
• Watch this one hour YouTube Video from the SBA to understand more – highly recommended
• Review this document from the National Restaurant Association