As the coronavirus pandemic of 2020 stretches into the current year, the federal government has stepped up with The American Rescue Plan Act. Congress passed this $1.9 trillion program, and President Joe BIden signed it into law on March 11. The plan includes $29 billion in help for restaurants and bars and related businesses through the Restaurant Revitalization Fund. The Small Business Administration is handling the program.
This Restaurant Revitalization Fund is so important. Over 110,000 restaurants closed by December of 2020 because of the pandemic. This equals one in six restaurants in the United States.
Many restaurant and bar owners waited for the pandemic to die down and for normalcy to return. But, they needed and still need economic help. Now, that help has arrived in the Restaurant Revitalization Fund. Carolina Gonzalez described the current restaurant crisis as a free fall in Bloomberg.com. And she also noted the following:
“Almost 90% of full-service restaurants in the survey reported declines, with revenue falling 36% on average.” Gonzalez then added, “Thirty-seven percent of operators say it is unlikely their restaurant will still be in business six months from now if there are no additional government relief packages.”
So, what do restaurant and bar owners need to know in order to apply and qualify for grant funds?
When Is the Application Period?
The Small Business Administration began accepting applications on May 3. The application period will end when the funds run out. So act fast to secure your Restaurant Revitalization Fund grant!
Who Qualifies for the Restaurant Revitalization Fund?
All business established before March 11, 2021 are eligible for a grant, if they meet the other requirements. So, if your restaurant didn’t open before January 1, 2020, it’s still eligible. And, even if a business hasn’t opened by the date of its application, it can apply for eligible expenses incurred in preparing to open.
And for those businesses that opened or that were planning to open after January 1, 2020, the grant fund eligibility formula is: Eligible Expenses Incurred February 15, 2020 to March 11, 2021] – [2020 Gross Receipts] – [PPP Loans] = GRANT FUND.
The following entities are eligible for a RRF grant:
- Restaurants, food stands, food trucks and food carts
- Snack and nonalcoholic beverage bars
- Bars, lounges, saloons and taverns
- Breweries, brewpubs, microbreweries, taprooms, tasting rooms
- Licensed facilities or premise of a beverage alcohol producer where the public may taste, sample, or purchase products
- Other similar places of business in which the public or patrons assemble for the primary purpose of being served food or alcohol
Also, there’s an additional requirement for bakeries, breweries, brewpubs, microbreweries, taprooms, tasting rooms, wineries and distilleries. For these businesses, public, onsite sales must make up at least 33% of gross receipts. And for inns, entities must have onsite sales of food and beverage to the public of at least 33% of gross receipts.
Who Does NOT Qualify for the Restaurant Revitalization Fund?
The following circumstances means an otherwise eligible business cannot apply for a grant to the Fund:
- As of March 13, 2020, the business owns or operates (together with any affiliated business) more than 2O locations, regardless of whether those locations do business under the same or multiple names.
- The business has received a Shuttered Venues Operations Grant (SVOG) or has a pending SVOG application.
- The business is a publicly traded corporation or is majority owned and controlled by a publicly traded corporation.
- And, the business does not have a valid business tax identification number (Employer Identification Number, Social Security Number, or Individual Taxpayer Identification Number).
- The business is a state or local government-owned or operated business.
- The business is permanently closed.
- And, the business is a non-profit.
- The business filed for bankruptcy under Chapter 7 or is liquidating under Chapter 11.
- The business has filed for bankruptcy under Chapter 11, 12, or 13 but does not have an approved plan for reorganization.
How Much Can an Eligible Business Receive?
The Small Business Administration established the minimum and maximum grant amounts allowed under the RRP. And, RRF grants will be reduced by the amount received from all Paycheck Protection Plan grants. The grant parameters are as follows:
- The minimum grant is $1,000.
- And the maximum grant is $5 million per location.
- But the total grant per entity is $10 million.
Can Franchises Apply ?
The simple answer is yes. But the franchise must meet the Federal Trade Commission definition of a franchise. However, the franchise must be in the SBA Franchise Directory. It must also have a franchise identifier code to ensure the franchise is eligible under SBA’s other eligibility criteria.
Not listed in the Directory? Then, the franchiser must submit the Franchise Disclosure Document (or other agreement) along with the other required documents.
What Documents Do I Need?
- The application: SBA Form 3172, completed, initialed, and signed.
- 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 Form 1120-S).
- IRS Form 1040 Schedule C; IRS Form 1040 Schedule F.
- For a partnership: partnerships 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 Bakery, Brewery, Brewpub, Distillery, Microbrewery, Taproom, Tasting Room or
Further documentation must show onsite sales to the public comprise at least 33% of gross receipts for 2019. These may include 2019 Tax and Trade Bureau (TTB) Forms filed, state or local government forms filed, or internally created reports from inventory management, sales reporting, or accounting software.
For Applicants That Are an Inn:
Further documentation must show onsite sales to the public comprise at least 33% of gross receipts for 2019. These may include internally created revenue reports or accounting reports.
How Do I Start the Process?
To start the application process, first visit the grant at GrantWatch.com.
How Will the SBA Distribute Restaurant Revitalization Fund Grants?
In addition, the SBA issued the following guidelines for how grant funds will be awarded:
- Businesses that can certify that they meet the definition of a woman-owned, veteran-owned, or socially and economically disadvantaged small business will be given priority for an award if their application is filed within the first 21 days the application is open for submissions.
- SBA will accept applications from all eligible applicants during the first 21 days, but will only distribute funds for approved applications that have self-certified as meeting the eligibility requirements for priority ownership.
- In addition, $5 billion is set aside for applicants with 2019 gross receipts of up to $500,000.
- An additional $4 billion is set aside for applicants with 2019 gross receipts from $500,001 to $1,500,000.
- Lastly, an additional $500 million is set aside for applicants with 2019 gross receipts of up to $50,000.
So, What Are Eligible Expenses?
The eligible expenses are eligible if incurred between February 15, 2020 and March 11, 2023:
- Payroll costs, including sick leave and costs related to the continuation of group health care, life, disability, vision, or dental benefits during periods of paid sick, medical, or family leave, and group health care, life, disability, vision, or dental insurance premiums.
- Payments on any business mortgage obligation (both principal and interest; note: this does not include any prepayment of principal on a mortgage obligation).
- Rent payments, including rent under a lease agreement (note: this does not include any prepayment of rent).
- Debt service (both principal and interest; note: this does not include any prepayment of principal or interest).
- Utility payments for the distribution of electricity, gas, water, telephone, or internet access, or any other utility that is used in the ordinary course of business for which service began before March 11, 2021.
- Maintenance expenses including maintenance on walls, floors, deck surfaces, furniture, fixtures, and equipment.
- Construction of outdoor seating.
- Supplies, including protective equipment and cleaning materials.
- Food and beverage expenses, including raw materials for beer, wine, or spirits.
Additional requirements are:
- Covered supplier costs made pursuant to a contract, order, or purchase order in effect at any time before the receipt of an RRF grant or, with respect to perishable goods, a contract, order, or purchase order in effect before or at any time during the covered period.
- Business operating expenses, including rent, equipment, supplies, inventory, accounting, training, legal, marketing, insurance, licenses and fees. Business operating expenses do not include expenses that occur outside of a company’s day-to-day activities.
Note: Past-due expenses are eligible if they were incurred between February 15, 2020 and ending March 11, 2023.
GrantWatch Has Answers to Your Questions
While many small business flourished or at least held their own during the economic crisis that came with the pandemic, restaurants, catering companies and bars suffered more than most. Some were able to pivot using new concepts to connect diners with quality food and drink. Others turned to pick-up and delivery only. And still others kept inside dining going for part or all of the pandemic, depending on the guidelines of the state they are located in. But nearly all restaurants needed help.
At $29 billion, the Restaurant Revitalization Fund program appears large but it will go fast — so act fast. And remember, GrantWatch lists over 900 grants for small businesses, including these. For more information, check out our FAQs page!