The Small Business Administration (“SBA”) has begun accepting applications from eligible businesses under the Restaurant Revitalization Fund Program (“RRF”). The RRF was created under the American Rescue Plan Act to provide funding to keep eligible businesses open during the COVID-19 pandemic. Eligible businesses may receive funding up to $10 million for lost revenue, but no more than $5 million per physical location, including affiliates, with a minimum of $1,000.00. Recipients of these funds are not required to repay anything as long as the funds are used for eligible uses no later than March 11, 2023.
Eligible businesses under the RRF are businesses that are not permanently closed and have experienced COVID-19 pandemic-related revenue losses including:
- 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
For businesses noted above that must have at least 33% of gross receipts from sales to the public, documentation must be submitted with the RRF application evidencing the sales for 2019. For businesses that opened in 2020 or have not yet opened, the applicant’s original business model should have contemplated at least 33% of gross receipts in on-site sales to the public.
Applicants for the RRF should apply through the RRF portal at https://restaurants.sba.gov or through an SBA-recognized Point of Sale vendor. In addition to the onsite sales documentation for certain businesses, applicants must provide documentation to verify tax information and gross receipts.
There are two application windows under the RRF. The first, “Priority Period”, which is from Day 1 through Day 21 is open to businesses that fall under “Priority Groups”. Priority Groups include a small business that is at least 51% owned by one or more individuals who are 1) women, 2) veterans, or 3) socially and economically disadvantaged. 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. All applicants must self-certify on the application that they meet eligibility requirements for this Priority Period.
The second window starts on Day 22 until all funds in the RRF are exhausted. During this second period, the SBA will accept applications from all eligible applicants.
Under the RRF, $5 billion has been set aside for applicants with 2019 gross receipts of not more than $500,000.00. An additional $4 billion has been set aside for applicants with 2019 gross receipts from $500,001.00 to $1,500,000. An additional $500 million has been set aside for applicants with 2019 gross receipts of not more than $50,000.00.
In order to calculate funding amounts, the SBA utilizes 3 different methods.
- For businesses in operation prior to or on January 1, 2019 the funding is calculated as 2019 gross receipts minus 2020 gross receipts minus Paycheck Protection Program (“PPP”) loan amounts.
- For business that began operations partially through 2019 the funding is calculated as the average 2019 monthly gross receipts times 12 minus 2020 gross receipts minus PPP loan amounts.
- For businesses that began operations on or between January 1, 2020 and March 10, 2021, or have not opened yet but have incurred eligible expenses, the funding is calculated as 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.
Businesses that began operations partially through 2019 may elect to use either calculation 2 or 3. For purposes of RRF, gross receipts do not include the following:
- 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
If you have a business that you believe qualifies under the RRF and would like more information about the RRF and application process, please contact David Tayman (DTayman@TLCLawFirm.com), Katie Lane Chaverri (KChaverri@TLCLawFirm.com) or Richard An (RAn@TLCLawFirm.com).