The newly passed American Rescue Plan Act
(ARPA) aims to help restaurants, bars and related businesses with a new grant program called the Restaurant Revitalization Fund (RRF). The RRF will offer $28.6 billion in grants to hard-hit restaurants and bars, with restaurants able to apply for grants based on lost revenue. Additionally, $5 billion of that total will be set aside expressly for businesses with 2019 gross receipts of less than $500,000.
Registration is open but the Small Business Administration (SBA) has announced will stop accepting applications for direct aid to restaurants from the Restaurant Revitalization Fund after 8 p.m. EST on Monday, May 24, signaling that the aid program is running out of its $28.6 billion in funding. The National Restaurant Association has created a petition in support of additional funding.
Restaurant Revitalization Award Portal
Restaurant Revitalization Fund Basics:
Application Help: For assistance preparing your application, you can access the following
Application Process: You can apply through SBA-recognized Point of Sale Restaurant Partners or directly via SBA in a forthcoming online application portal. Registration with SAM.gov is not required. DUNS or CAGE identifiers are also not required. If you would like to prepare your application, view the sample application form. You will be able to complete this form online. Please do not submit RRF forms to SBA at this time.
Additional Documentation Required:
- Verification for Tax Information: IRS Form 4506-T, completed and signed by Applicant. Completion of this form digitally on the SBA platform will satisfy this requirement.
- Gross Receipts Documentation: Any of the following documents demonstrating gross receipts and, if applicable, eligible expenses
- Business tax returns (IRS Form 1120 or IRS 1120-S)
- IRS Forms 1040 Schedule C; IRS Forms 1040 Schedule F
- For a partnership: partnership’s IRS Form 1065 (including K-1s)
- Bank statements
- Externally or internally prepared financial statements such as Income Statements or Profit and Loss Statements
- Point of sale report(s), including IRS Form 1099-K
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 2019, which may include Tax and Trade Bureau (TTB) Forms 5130.9 or TTB. For businesses who opened in 2020, the Applicant’s original business model should have contemplated at least 33.00% of gross receipts in onsite sales to the public.
For applicants that are an inn:
Processing Priority Period:
- Documents evidencing that onsite sales of food and beverage to the public comprise at least 33.00% of gross receipts for 2019. For businesses who opened in 2020, the Applicant’s original business model should have contemplated at least 33.00% of gross receipts in onsite sales to the public.
- Priority Period - Days 1 - 21: SBA will accept applications from all eligible applicants, but only process and fund priority group applications. During this period, SBA will fund applications where the applicant has self-certified that it meets the eligibility requirements for a small business owned by women, veterans, or socially and economically disadvantaged individuals.
- All Applicants - Days 22-Fund Exhaustion: SBA will accept applications from all eligible applicants and process applications in the order in which they are approved by SBA.
Own or operate 20 or fewer establishments (together with any affiliated business), regardless of ownership type of the locations and whether those locations do business under the same or multiple names, as of March 13, 2020. An affiliated business has an equity or right to profit distribution of 50 percent or more, or has contractual authority to control the direction of the business, provided that such affiliation “shall be determined as of any arrangements or agreements in existence as of March 13, 2020.”
- Food stands, food trucks, food carts
- Bars, saloons, lounges, taverns
- Snack and nonalcoholic beverage bars
- Bakeries (onsite sales to the public comprise at least 33% of gross receipts)
- Brewpubs, tasting rooms, taprooms (onsite sales to the public comprise at least 33% of gross receipts)
- Breweries and/or microbreweries (onsite sales to the public comprise at least 33% of gross receipts)
- Wineries and 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)
- Licensed facilities or premises of a beverage alcohol producer where the public may taste, sample, or purchase products
Cross-program eligibility on SBA COVID-19 relief options
- A small business concern that is at least 51 percent owned by one or more individuals who are:
- Women, or
- Veterans, or
- Socially and economically disadvantaged (see below).
- Applicants must self-certify on the application that they meet eligibility requirements
- Socially disadvantaged individuals are 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.
- $23.6 billion is available for the SBA to award in an equitable manner to businesses of different sizes based on annual gross receipts.
- $5 billion is available to businesses with gross receipts of $500,000 or less during 2019.
- Maximum: The total grant amount for an eligible business and any affiliated businesses is capped at $10 million and is limited to $5 million per physical location of the business.
- Set asides:
- $5 billion is set aside for applicants with 2019 gross receipts of not more than $500,000
- An additional $4 billion is set-aside for applicants with 2019 gross receipts from $500,001 to $1,500,000
- An additional $500 million is set-aside for applicants with 2019 gross receipts of not more than $50,000
*SBA reserves the right to reallocate these funds at the discretion of the Administrator.
Funding Amount: Payment calculations are as follows
- Calculation 1: for applicants in operation prior to or on January 1, 2019:
- 2019 gross receipts minus 2020 gross receipts minus PPP loan amounts
- Calculation 2: for applicants that began operations partially through 2019:
- (Average 2019 monthly gross receipts x 12) minus 2020 gross receipts minus PPP loan amounts
- Calculation 3: for applicants that began operations on or between January 1, 2020 and March 10, 2021 and applicants not yet opened but have incurred eligible expenses:
- Amount spent on eligible expenses between February 15, 2020 and March 11,2021 minus 2020 gross receipts minus PPP loan amounts
For those entities who began operations partially through 2019, you may elect (at your own discretion) to use either calculation 2 or calculation 3.
Maximum and Minimum Amounts: SBA may provide funding up to $5 million per location, not to exceed $10 million total for the applicant and any affiliated businesses. The minimum award is $1,000.
Gross receipts: For the purposes of this program, gross receipts does not include:
- Amounts received from Paycheck Protection Program (PPP) loans (First Draw or Second Draw)
- Amounts received from Economic Injury Disaster Loans (EIDL)
- Advances on EIDL (EIDL Advance and Targeted EIDL Advance)
- State and local grants (via CARES Act or otherwise)
- SBA Section 1112 payments
Allowable Use of Funds: Funds may be used for specific expenses including:
- Business payroll costs (including sick leave)
- Payments on any business mortgage obligation
- Business rent payments (note: this does not include prepayment of rent)
- Business debt service (both principal and interest; note: this does not include 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
Covered Period: Eligible expenses are those incurred from February 15, 2020 to December 31, 2021, or a date determined by the SBA. If all grant funds are not spent by the business, or the business permanently closes before the end of the covered period, the business must return unused funds to the Treasury.
RRF Frequently Asked Questions:
Who is eligible for RRF grants?
Most American restaurants and bars that lost revenue in 2020 versus 2019 will be eligible to apply for RRF grants. The ARPA explicitly names the following types of establishments that should be eligible: “restaurant, food stand, food truck, food cart, caterer, saloon, inn, tavern, bar, lounge, brewpub, tasting room, taproom, licensed facility or premise of a beverage alcohol producer where the public may taste, sample, or purchase products.”
However, any restaurant or bar that is part of a publicly-traded company or owned by a state or local government is not eligible to apply. Also, owners that operate more than 20 restaurants are ineligible. Notably, if you are the owner of a franchise and you do not control more than 20 locations, you are likely eligible to apply.
How and when can I apply?
The Small Business Administration (SBA) will administer and disperse the RRF grants, but the program does not yet have an official launch date. Those interested in obtaining RRF grants should keep a close eye on the SBA’s COVID-19 relief options web portal.
How much can I get from the grant program?
Generally speaking, restaurants can apply for grants that are equal to 2020 gross revenue minus 2019 gross revenue. For businesses in operation for all of 2019 and 2020, the maximum grant size will be $5 million for restaurants and $10 million for restaurant groups. Grant funds will not be taxed like income.
If a restaurant was not operating for all of 2019, the maximum grant value is the average monthly gross receipts in 2020 minus the average monthly gross receipts in 2019. If a restaurant was not in operation for all of 2020, it could potentially receive a grant that totals the amount of “eligible expenses” put into the business to date.
The SBA will release more information later to clarify the amount restaurants established after January 2019 can apply for and how it may adjust grant amounts based on “relative local costs.”
What can grant funds be used for?
The RRF grants are only able to be used on specific expenses. These include:
- Payroll costs.
- Payments of principal or interest on any mortgage obligation.
- Rent payments, including rent under a lease agreement.
- Maintenance, including new outdoor seating construction.
- Supplies, including PPE and cleaning materials.
- Food and beverage inventory.
- Covered supplier costs.
- Operational expenses.
- Paid sick leave.
- Any other expense SBA says is essential to maintain operations.
The “covered period” for what expenses can be paid by the grant must be incurred between February 15, 2020, to December. 31, 2021.