SBA Launches Restaurant Revitalization Fund
April 28, 2021
By: Eric N. Fischer, Alex Milona
As part of the implementation of the American Rescue Plan Act (ARPA), the Small Business Administration (SBA) is awarding funding through the Restaurant Revitalization Fund (RRF) to eligible applicants. SBA has provided a sample application form and guidance that clarify eligibility, calculation of grant amounts, and how recipients can use the grants.
Key terms, information and takeaways from the sample application and guidance are summarized below.
- Businesses eligible to receive an RRF grant are:
- Food stands
- Food trucks
- Food carts
- Snack and nonalcoholic beverage bars
- Bakeries (onsite sales to the public comprise at least 33% of gross receipts)
- Tasting rooms
- Taprooms (onsite sales to the public comprise at least 33% of gross receipts)
- Breweries (onsite sales to the public comprise at least 33% of gross receipts)
- Distilleries (onsite sales to the public comprise at least 33% of gross receipts)
- Inns (onsite sales of food and beverage to the public comprise at least 33% of gross receipts)
- Onsite sales are defined to include food or beverages purchased for takeout at the applicant’s premise, purchased online and picked up, or delivered directly to a consumer.
- Certain potential applicants are specifically excluded from RRF grant eligibility. The excluded applicants are (1) state or local government-operated businesses, (2) entities that as of March 13, 2020, owned or operated (alone or together with affiliated businesses) more than 20 locations, (3) entities with pending applications for, or who have received, a Shuttered Venue Operator grant, or (4) publicly traded companies.
Certifications, Application Information, and When to Apply
- In applying for an RRF grant, applicants must certify in good faith that the uncertainty of current economic conditions makes necessary the grant request to support the ongoing operations of the eligible applicant.
- Applicants that provide false certifications could be referred to the U.S. Department of Justice for investigation and potential federal False Claim Act charges.
- Applicants must provide documentation demonstrating a reduction in gross receipts.
- Registration for the SBA application portal begins here on Friday, April 30 at 9:00 AM Eastern Time. Applications open on Monday, May 3 at noon.
- Once the application period opens, the first 21 days are called a “priority period.” This means that the SBA will only process applications from “priority groups” including: women, veterans, social disadvantaged individuals and economically disadvantages 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 those socially disadvantaged individuals whose ability to compete in the free enterprise system has been impaired due to diminished capital and credit opportunities as compared to others in the same business area who are not socially disadvantaged
- The maximum grant amount available for each eligible application (and affiliated entities) is $10 million, or $5 million per physical location.
- Specific grant amounts are to be based on the pandemic-related loss of the applicant, which is calculated by subtracting (1) the gross receipts of the applicant in 2020 from (2) the gross receipts of the applicant in 2019. Prior to the calculation the 2019 gross receipts are reduced by the amount of Paycheck Protection Program Loans (PPP Loans), if any, that the applicant has received. The guidance clarifies that gross receipts generally means all revenue in whatever form received or accrued (in accordance with the applicant’s accounting method, i.e., accrual or cash) from whatever source, including from the sales of products or services, interest, dividends, rents, royalties, fees, or commissions, reduced by returns and allowances but excluding net capital gains and losses.
Use of Grant Proceeds
- RRF grant proceeds can be used to pay any of the following costs during the covered period to the extent incurred as a direct result of, or during, the COVID-19 pandemic:
- Payroll costs, defined consistently with how this term is used in PPP Loans.
- The principal or interest on any mortgage obligations, excluding prepayment of principal.
- Rent payments, excluding prepayment of rent.
- Maintenance expenses, including construction to accommodate outdoor seating, and walls, floors, deck surfaces, furniture, fixtures, and equipment.
- Supplies, including protective equipment and cleaning materials.
- Food and beverage expenses within the normal scope of the applicant’s business.
- Covered supplier costs, which are broadly defined to cover essential payments to suppliers of goods pursuant to a contract, order, or purchase order that was in effect before the covered period or in effect at any time prior to the end of the covered period if pertaining to perishable goods.
- Operational expenses, which are not defined.
- Other expenses as the SBA determines to be essential to maintaining the eligible applicant.
- To the extent RRF grant proceeds are not used prior to March 11, 2023 or if the applicant ceases operations on or before the last day of the covered period, the remaining RRF grant proceeds are to be returned.
In the event you have follow up questions about the Restaurant Revitalization Fund or have other questions about COVID-19 related relief, please contact your Nyemaster Goode attorney.