In this 10-minute read:
- Restaurant Revitalization Fund (RRF) introduction
- Who is eligible for RRF grants?
- How and when to apply for RRF assistance
- How much can I get for an RRF grant?
- 21 day “priority period” for women, veterans, and socially/economically disadvantaged borrowers
- Can I still get an RRF grant if I got PPP loans?
- Should I still apply for PPP?
- Required documents and certifications for Restaurant Revitalization Fund approval
- How can I spend my RRF money / authorized expenses?
When and how can I apply for a Restaurant Revitalization Fund grant?
The SBA’s RRF application window opened at noon EDT on May 3, 2021. You can apply through SBA-recognized Point of Sale (POS) vendors or directly via the SBA’s online application portal: Participating POS providers include Square, Toast, Clover, NCR Corporation (Aloha), and Oracle. If you are working with Square or Toast, you do not need to register beforehand on the application portal. Please note: for the first 21 days of the program, the SBA will accept applications from all qualified businesses but will only process and fund applications that fit the SBA’s definition of “priority groups”: your business must be least 51 percent owned by one or more individuals who are: women, or veterans, or socially and economically disadvantaged (see below for definitions).
Background of the Restaurant Revitalization Fund 2021
The American Rescue Plan Act of 2021 (a $1.9 trillion economic stimulus bill signed into law by President Biden on March 11) established the Restaurant Revitalization Fund (RRF) to help restaurants, caterers, and related food-service businesses keep their doors open during these financially crazy times. This program is not currently accepting applications as of the time of this article’s publication, but the RRF will provide eligible restaurants with funding equal to their pandemic-related revenue loss (up to $10 million per business and no more than $5 million per physical location). Recipients are not required to repay the funding as long as funds are used for eligible purposes no later than March 11, 2023.
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It’s impossible to fully calculate the financial impact of the COVID-19 pandemic on America’s businesses, workers, and economy, but it’s clear that one of the hardest-hit sectors since the first days of the panic has been the food service/restaurant industry. Mandatory lockdowns left many such businesses completely shuttered for weeks and even months, and in many states there are still severe restrictions on operating hours, patron capacity, and other factors that seriously impact a business’s bottom line. Roughly a quarter have never reopened.
The Restaurant Revitalization Fund looks to provide another glimmer of hope for some of America’s most vulnerable and vital businesses. Let’s go over some basics, what we know, and what we don’t yet know.
Who can apply for RRF grants? Who is eligible for the Restaurant Revitalization Fund?
The RRF (as its name implies) is intended only for restaurants and similar food-service entities. These businesses were hit particularly hard by COVID-19 shutdowns and restrictions, and while the Paycheck Protection Program has provided much needed assistance during these unprecedented times, lots of restaurants, cafes, food stands, trucks, carts, caterers, bars, saloons, taverns, inns, etc. have been seriously hurt and still need help.
The short answer is if you own a restaurant or food-service business and have experienced losses as the result of COVID-19, you will likely be able to apply, even if you started your business in 2020 or 2021 (however, the money will almost certainly run out quickly).
RRF eligible businesses
According to the SBA, RRF eligible businesses that have experienced pandemic-related revenue loss include:
- Restaurants
- Food stands, food trucks, food carts
- Caterers
- Bars, saloons, lounges, taverns
- Snack and nonalcoholic beverage bars
- Bakeries (onsite sales to the public must comprise at least 33% of gross receipts)
- Brewpubs, tasting rooms, taprooms (onsite sales to the public must comprise at least 33% of gross receipts)
- Breweries and/or microbreweries (onsite sales to the public must comprise at least 33% of gross receipts)
- Wineries and distilleries (onsite sales to the public must comprise at least 33% of gross receipts)
- Inns (onsite sales of food and beverage to the public must 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
How much federal stimulus funding is being allocated to the Restaurant Revitalization Fund?
The total funding for the RRF is around $28.6 billion. $5 billion is being set aside for applicants with 2019 gross receipts of not more than $500,000. An additional $4 billion will be available for applicants with 2019 gross receipts between $500,001 and $1,500,000.
How about truly small restaurants, food carts, pubs, dives, etc.? As long as they meet the eligibility requirements, there is an additional $500 million set aside for applicants with 2019 gross receipts of not more than $50,000.
Compared to the $1.9 trillion total allocation for the American Rescue Plan Act, and the ~$760 billion that has so far been approved under the Paycheck Protection Program, the RRF’s allocation may seem like peanuts. However, since the RRF is set up to provide funding equal to a business’s COVID-related losses, it will still come as a welcome relief for those lucky enough to get their applications submitted and approved before the funding runs out.
How much can I get for a RRF grant?
Restaurant Revitalization Fund applicants may qualify for 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.
How do I apply for a Restaurant Revitalization Fund grant?
The RRF application window opened at noon EDT on May 3, 2021. You can apply through SBA-recognized Point of Sale (POS) vendors or directly via the SBA’s online application portal: Participating POS providers include Square, Toast, Clover, NCR Corporation (Aloha), and Oracle. If you are working with Square or Toast, you do not need to register beforehand on the application portal.
If you would like to prepare your documentation for your application, you can view a sample RRF application form from the SBA here: SBA Form 3172.
Where / how do I submit my RRF application?
If the application window is open to you, you will be able to apply for an RRF grant via SBA-recognized Point of Sale Restaurant Partners (see above) or directly through the SBA’s online application portal.
IMPORTANT NOTE: there will be a “priority period” for the first 21 days of the RRF application window
The SBA says that for the first 21 days it will accept applications from all eligible applicants, but only process and fund applications belonging to “priority groups.”
- 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.
After the first 21 days of the application period, the SBA will accept applications from all eligible applicants and process applications in the order in which they are approved by the SBA.
How does the RRF maximum grant amount calculated, and how is it different from PPP maximum loan amounts?
There are different RRF grant calculations depending on whether:
- You were in operation prior to or on January 1, 2019;
- You began operations began operations partially through 2019; or
- You began operations on or between January 1, 2020 and March 10, 2021; OR you have not yet opened but as of March 11, 2021, have incurred eligible expenses
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 2021 gross receipts (through March 11, 2021) minus PPP loan amounts
Note, if you began operations partially through 2019, you may elect (at your own discretion) to use either calculation 2 or calculation 3.
See the SBA’s sample RRF application for details, but the upshot is (for most applicants) if you made less money in 2020 than in 2019, you can likely qualify for an RRF grant for the amount of the difference (less any PPP loans you received). Or for newer businesses, you can qualify for an RRF grant if your gross receipts up to March 11, 2021 are less than your expenses so far.
How are PPP loan max amounts calculated?
The Paycheck Protection Program maximum loan amount for first-draw loans is based on 2.5X your average monthly payroll/expenses for 2019 or 2020 (for independent contractors, sole props, gig workers, and self employed individuals without employees, you can elect to use either your gross or net income from your 1040 Schedule C as the basis of determining your average monthly expenses).
However, In an effort to provide more substantial relief for these vital restaurants and food service businesses in 2021, the SBA has raised the maximum loan amount for PPP second draw loans for accommodation and food services businesses to 3.5 times their monthly average expenses, rather than the standard 2.5X for other types of businesses.
Should I still apply for PPP for my restaurant? Or for RRF grant? Or both?
Deciding to apply for PPP funding is an absolute no-brainer for all restaurants and related independent contractors, sole proprietors, gig workers, and self-employed individuals that were in business prior to February 15, 2020. If you haven’t applied for your PPP loans yet, you absolutely should as soon as possible. The PPP deadline has been extended but the application cutoff date is May 31, 2021, so you need to hurry. Start your free PPP application here.
All estimates are that RRF funding will go very quickly and potentially a lot of restaurants and food services businesses will be left out. It remains to be seen whether the RRF will be re-funded for a “second round” after the initial money is allocated.
On the other hand, unlike the PPP, the RRF will be available to businesses that were started AFTER the COVID-19 pandemic hit. To be eligible for a PPP loan, you must demonstrate that you were in business before February 15, 2020. If you started your business after that date, the RRF may be an option for you go get vital federal relief funding.
We recommend if you’ve been struggling due to the financial impacts of COVID-19, you should apply for all federal assistance that is available to you. If you qualify for forgivable PPP loans and you haven’t got yours yet, start your start your application here.
Can I still get a Restaurant Revitalization Fund grant if I received PPP loan/s?
Yes. The SBA has stated that RRF applicants who received PPP loans are not ineligible, but that PPP loans received by the RRF applicant will affect the applicant’s funding calculation.
Basically any PPP first or second-draw funding you received will be combined with your gross receipts in calculating your maximum RRF grant amount (see section above).
What documents / documentation and certifications are required to apply for a Restaurant Revitalization Fund (RRF) grant?
According to the sample RRF application form the SBA has released (which may be updated or modified before the SBA RRF application portal opens), the following is required documentation for all RRF applicants:
Required documents
- The RRF application, completed, initialed, and signed (completion of this form digitally on the SBA Grant Platform will satisfy this requirement)
- IRS Form 4506-T, completed and signed by the applicant (completion of this form digitally on the SBA Grant Platform will satisfy this requirement)
- Any of the following documents demonstrating gross receipts:
- Applicants that were in operation prior to or on January 1, 2019, must supply documentation of gross receipts for 2019 and 2020;
- Applicants that began operations partially through 2019, must supply documentation of gross receipts for 2019 and 2020;
- Applicants that began operations on or between January 1, 2020 and ending on March 10, 2021 and applicants that have not yet opened but as of March 11, 2021, but have incurred eligible expenses, must supply documentation of gross receipts and eligible expenses for the length of time in operations
Acceptable documentation of gross receipts and, if applicable, eligible expenses, includes the following:
- 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
RRF applicants that are a brewpub, tasting room, taproom, brewery, winery, distillery, or bakery: In addition to the documents above, you must provide documents showing that onsite sales to the public comprise at least 33% of gross receipts in 2019 included in your funding calculation, which may include Tax and Trade Bureau reports filed or to be filed that cover the period for which you are reporting gross receipts, or if applicable, eligible expenses.
RRF applicants that are an inn: In addition to the documents above, you must provide documents showing that onsite sales of food and beverage to the public comprise at least 33% of gross receipts in 2019 included in your funding calculation.
Required certifications
All RRF applicants will also need to certify (among other things) that:
- You haven’t permanently closed
- You actually need the funding
- You must use RRF funds only on eligible uses within the covered period, which is the period beginning on February 15, 2020 and ending on March 11, 2023
- If your business permanently closes, the covered period will end when your business permanently closes or on March 11, 2023, whichever occurs sooner
- If you are unable to use all of the funds received on eligible expenses by the end of the covered period must return any unused funds to the Treasury.
- You and your affiliates do not own or operate more than 20 locations, regardless of whether those locations do business under the same or different names
- You have not applied for or received a Shuttered Venue Operator grant from the SBA
- Your business s not a publicly-traded company
For a complete list of certifications, see the SBA’s sample RRF application.
How can I spend my Restaurant Revitalization Fund grant money?
According to the SBA, RRF 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
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