Three Surprising Details of the Restaurant Revitalization Fund (and one not-so-surprising detail)

In reviewing the reams of information about the Restaurant Revitalization Fund, I’ve uncovered three details that might surprise you (and one that probably won’t).

Restaurant Revitalization Fund Breaking News

This week, the Small Business Administration (SBA) announced that:

1. Registration for the SBA application portal will begin on Friday, April 30, 2021, at 9 am Eastern Time
2. The portal will open to accept applications on Monday, May 3, 2021, at noon Eastern Time

Visit restaurants.sba.gov to access the application portal.

If you are an eligible business, you are encouraged to prepare NOW for your application (see below), register on Friday, and then log into the portal & walk through the submission process on Monday.

Here’s the not-so-surprising detail:

Congressional estimates place losses for eligible businesses in the hundreds of billions, but the program was only funded with $28.6 billion.

Businesses that have prepared for the application before the portal opens will have an advantage.

What is the Restaurant Revitalization Fund?

The $28.6 billion Restaurant Revitalization Fund (RRF) was established by the American Rescue Plan Act of 2021 to provide grant support to eligible entities sustaining financial losses due to the COVID-19 pandemic.

The program is designed to provide food & drink establishments with funding equal to their pandemic-related revenue loss.

Grant recipients will not be required to repay the funding as long as the funds are used for eligible purposes.

Who is Eligible?

All food service or drinking establishments including:

*These businesses must show on-site sales to the public comprised at least 33% of gross receipts in 2019.
**Inns must show on-site sales of food & beverage to the public comprised at least 33% of gross receipts in 2019.

Who is NOT Eligible?

• Publicly traded companies
• Businesses with (together with any affiliated business) more than 20 locations
• Businesses that received Shuttered Venue Operators Grant (SVOG) or have a pending application for an SVOG grant
• Businesses whose calculated grant request is < $1,000
• Businesses in bankruptcy without a confirmed plan of reorganization
• Businesses that are permanently closed
• Other traditional SBA ineligible businesses as defined in 13 CFR 120.110 (nonprofits, lenders, passive, pyramid schemes, gambling, illegal activity, government-owned, sexually-oriented, etc.)

How is the Funding Amount Calculated?

There are three primary funding calculations, depending upon when the business was started.

Calculation 1 – Applicants in operation on or before Jan 1, 2019

2019 Gross Receipts (from tax return) – 2020 Gross Receipts – Aggregate Amount of PPP Loans Received

Calculation 2 – Applicants that began operation during 2019

Step 1 – Calculate monthly average of 2019 Gross Receipts and multiply by 12 to annualize

Step 2 – 2019 Annualized Gross Receipts – 2020 Gross Receipts – Aggregate Amount of PPP Loans Received

Calculation 3 – Applicants that began operation after Jan 1, 2020

2020 Eligible Expenses – 2020 Gross Receipts – Aggregate Amount of PPP Loans Received

Surprising detail #1

There is actually a fourth calculation method. This allows an applicant to combine calculations 1, 2, and 3 for various locations and roll them up to create a customized aggregate.

What are Eligible Expenses?

Surprising detail #2

RRF funds can be used to bring overdue payments current, pay down credit cards, and make payments on an EIDL/PPP loan.

How Will Applications be Processed?

Priority Period

For the first 21 days, the SBA will:

1. Accept applications from all eligible applicants
2. Prioritize funding applicant businesses at least 51 percent owned and controlled by individuals who are women, veterans, and/or socially and economically disadvantaged individuals.

Priority Groups

Women and Veterans are pretty clear-cut, but what is the definition of socially & economically disadvantaged?

The SBA presumes the following groups to be socially disadvantaged:

• Black Americans
• Hispanic Americans
• Native Americans
• Asian Pacific Americans
• Subcontinent Asian Americans

Economic thresholds for individuals:

• Assets < $4 million
• Income < $250,000, averaged over three years
• Net Worth < $250,000

Surprising detail #3

Ownership groups can mix & match their priority groups to reach the 51% threshold. For example, if there were three 20% owners: one veteran; one woman; and one black American. Their three ownership shares = 60% in priority groups would qualify!

Open to All Groups

After the 21 day priority period, the SBA will accept applications from all eligible applicants and process applications in the order in which they are approved.

How Should I Prepare?

If you have already gone through the application process for the Paycheck Protection Program (PPP) or Economic Injury Disaster Loan (EIDL), then this process will already be somewhat familiar.

1. Review the SBA’s Restaurant Revitalization Program Guide
2. Print out the Restaurant Revitalization Fund sample application (SBA Form 3172). Note: this is for preparation purposes. You will complete this form electronically in the SBA web portal when submitting your application.
3. Pull together all the necessary supporting documentation:

• All Applicants
  • The EIN/SSN/ITIN and address of anyone that owns 20% or more of the business
  • A list of affiliated businesses (one of the owners listed above has a 50% or greater ownership share of another business)
  • IRS Form 4506-T, “Request for Transcript of Tax Return.” Note: this is for preparation purposes. You will complete this form electronically in the SBA web portal when submitting your application.
  • 2019 Gross Receipts Documentation – IRS Tax Returns filed (you are not eligible if you have not filed 2019 tax returns)
  • 3 most recent months of bank statements for the account into which RRF funds will be deposited
• If using Calculation 1 or Calculation 2
  • 2020 Gross Receipts (at least one):
    • Preferred (“Gold Standard”)
      • 2020 Federal Tax Returns filed
      • Point of Sale reports
    • Accepted (but may delay your review)
      • Externally or internally prepared financial statements certified as to accuracy by Applicant
• If using Calculation 3
  • 2020 Gross Receipts documentation (one of the following):
    • Preferred: 2020 Federal Tax Returns
    • Preferred: 2020 Point of Sale Reports
    • Accepted (but may delay your review): Externally or internally prepared financial statements certified as to accuracy by Applicant
  • 2021 Gross Receipts documentation (one of the following):
    • Preferred: 2021 Point of Sale Reports through March 11, 2021
    • Accepted (but may delay your review): Externally or internally prepared financial statements through March 11, 2021 certified as to accuracy by Applicant
  • Eligible Expense Documentation (one of the following):
    • Preferred (provides fastest SBA Review): Qualified third-party accountant, bookkeeper or CPA Comfort Letter with associated financial statements
    • Accepted (but may delay your review): Externally or internally prepared financial statements through March 11, 2021 certified as to accuracy by Applicant
    • Accepted (but may delay your review): All expense documentation, e.g., payroll documents (941’s), business Debt documentation (loan statements), etc.
• For applicants that are a brewpub, tasting room, taproom, brewery, winery, distillery, or bakery
  • Documents evidencing that onsite sales to the public comprise at least 33.00% of gross receipts
• For applicants that are an inn
  • Documents evidencing that onsite sales of food & beverage to the public comprise at least 33.00% of gross receipts

4. Complete the sample application using information from the documentation you’ve gathered.

Where Can I Find More Information?

The following is a list of resources regarding the RRF:

• The SBA’s Restaurant Revitalization Page
• The SBA’s Restaurant Revitalization Fund Knowledge Base
• The SBA’s call center support: 1-844-279-8898 (8 am ET – 8 pm ET)
• The Independent Restaurant Coalition (IRC) Resource Page
• IRC is holding restaurant roundtables all this week with SBA staff (you can watch, even if you missed it live):
  • April 27th
    • 3:30pm ET: IRC x Open Table
  • April 28th
    • 12pm ET: IRC x Massachusetts Restaurants United
    • 3:30pm ET: IRC x James Beard Foundation
  • April 29th
    • 12pm ET: IRC x FoodLab Detroit
    • 3:30pm ET: IRC x United States Bartenders’ Guild x New York Hospitality Coalition x Main Street America
• The National Restaurant Association RRF FAQ page
• The RestaurantOwner.com Financial Assistance Resources Page