What You Need to Know About the Restaurant Revitalization Fund
COVID has hit restaurants hard. Now that the vaccine is here, many restaurants are reopening, but they are still feeling the impact of the past year. The Restaurant Revitalization Fund is here to help.
What are the Details of the Restaurant Revitalization Fund (RRF)?
The RRF is part of the American Rescue Plan Act. It is meant to provide funding to restaurants and other businesses to keep them from closing. Funding will be equal to their pandemic related revenue losses providing up to $10 million per business and up to $5 million per physical location.
The loan is forgivable if the money is put towards eligible uses by March 11, 2023.
Who is Eligible?
The following businesses may apply for the RRF:
- Food stands, trucks or carts
- Snack and nonalcoholic beverage bars
- Bars, taverns, saloons and lounges
- Bakeries with onsite sales to the public accounting for at least 33% of gross income
- Breweries, taprooms and tasting rooms with onsite sales to the public accounting for at least 33% of gross income
- Distilleries and wineries with onsite sales to the public accounting for at least 33% of gross income
- Inns with onsite sales of food and beverage to the public accounting for at least 33% of gross income
- Premises or licensed facilities of an alcoholic beverage producer that serves the public for tasting, sampling and purchasing
How Can I Apply?
The SBA will be providing an online application that can be accessed at the following link. https://restaurants.sba.gov/requests/borrower/login/?next=/
You can also apply through SBA recognized Point of Sale (POS) vendors including Clover, Square, Toast, Oracle and NCR Corporation (Aloha). If you are working with Square or Toast, you will not need to register on the SBA application portal before submitting.
What Documentation Will Be Required?
When you apply, the SBA will request the following documentation:
- Form 4506-T completed and signed by the applicant. You may also complete the form digitally on the SBA platform.
- Proof of gross receipts
You may also need to submit:
- Business tax returns such as IRS Form 1120 or 1120-S
- IRS Forms 1040 Schedule C and/or 1040 Schedule F
- Partnership’s IRS Form 1065 (including K-1’s)
- Bank statements
- Profit and loss and other income statements
- Point of sales reposts including IRS form 1900-K
If you are submitting for a brewpub, tasting room taproom, brewery, winery, bakery or distillery you will need to provide:
- Documents stating onsite sales to the public accounting for at least 33% of gross receipts for 2019. If businesses opened in 2020, applicants will need to show proof that public sales made up 33% or more of gross receipts in the opening year.
If you are submitting for an inn, you will need to provide:
- Documents that show onsite food and beverage sales accounted for at least 33% in gross receipts. If the business opened in 2020, applicants will need to show proof that public sales made up 33% or more of gross receipts in the opening year.
When Can I Apply?
Applications are available starting May 3. However, only priority groups may apply in the first 21 days the loan is available. These groups include small businesses at least 51% owned by a woman, veteran and socially or economically disadvantaged groups.
- Socially disadvantaged business owners are those who have experienced bias or prejudice due to their race, culture or ethnicity.
- Economically disadvantaged business owners are those who are dealing with difficulties competing in free enterprise due to diminished capital and credit opportunities.
Applicants must self-certify that they meet priority requirements when applying.
Those who do not fit into priority groups will be able to apply starting on the 22nd day after the loan become available. Applications will continue to be accepted until funds are exhausted.
What is the Government’s Budget Like?
Set asides for the loan are as follows:
- $5 billion is being allocated for applicants with 2019 gross receipts that equal $500,000 or less
- $4 billion is being allocated for applicants with 2019 gross receipts that range between $500,001 and 1,500,000
- $500 million is being allocated for applicants with 2019 gross receipts that are $50,000 or less
How Much Will I Get?
Here are some calculations that will give you an idea of the amount of money that may be coming your way.
- Calculation 1: Businesses that opened their doors on or before Jan. 1, 2019 can subtract 2020 gross receipts and PPP loan amounts from 2019 gross receipts
- Calculation 2: Businesses that were open through part of 2019 can average their monthly gross and multiply it by 12. Then subtract 2020 gross receipts and PPP loans from that amount.
- Calculation 3: Businesses that opened between January 1, 2020 and March 10,2021 and applicants that have not yet opened businesses but incurred expenses may use expenses incurred between Feb. 15,2020 and March 11.2021 minus 2020 gross receipts, 2021 gross receipts up to March 11 and PPP loans
Gross receipts will not include the amounts received from:
- PPP loans (first or second draw)
- Economic Injury Disaster Loans
- Advances on Economic Injury Disaster Loans
- State and local grants of any kind
- SBA Section 1112 payments
What Can I Use My Loan For?
The funds you receive can be used to cover any of the following expenses:
- Business mortgage payment
- Business rent payments
- Business debt payments
- Business utility payments
- Business maintenance expenses
- Construction of outdoor seating and equipment
- Business food and beverage expenses
- Business operating expenses
- Business supplies and supplier costs
If you work in the restaurant industry and are trying to recover from the financial impact of the pandemic, the Restaurant Revitalization Fund can help. Check the SBA web site to find out when you may be eligible to apply for relief.
For more information on COVID-19 relief options for small businesses visit https://www.sba.gov/funding-programs/loans/covid-19-relief-options