The U.S. Small Business Administration has unveiled opening dates for the much-anticipated Restaurant Revitalization Fund (RRF).
Registration for the $28.6 billion program will open at 9:00 a.m. ET on April 30, with the doors opening for application submissions starting at noon ET on May 3.
In preparation for the May 3 opening of the application window, the SBA advised eligible entities to familiarize themselves with the application process in advance. Specific steps recommended include:
Registering for an account in advance at sba.gov starting Friday, April 30, 2021, at 9 a.m. ET.
Reviewing the official guidance, including the program guide, frequently asked questions, and application sample.
Preparing the required documentation.
Working with a point-of-sale vendor or visiting sba.gov to submit an application when the application portal opens. (Note: If an applicant is working with a point-of-sale vendor, they do not need to register beforehand on the site.)
Restaurants and other food providers hard-hit during the COVID-19 pandemic have been anxiously awaiting direct aid to help them recover after more than a year of government-imposed closures and dramatic reductions in sales. The RRF will award restaurants with grants equal to their pandemic-related revenue loss, up to $10 million per business and no more than $5 million per physical location.
All eligible restaurants will be able to submit applications as soon as the program opens, but for the first 21 days the SBA will prioritize reviewing applications from small businesses owned by women, veterans, and socially and economically disadvantaged individuals.
After the first 21 days, the SBA will fund all eligible applications on a first-come, first-serve basis, so the agency is recommending that all eligible entities submit applications as soon as the portal opens.
Eligible entities for the RRF include the following:
Food stands, food trucks, and food carts;
Bars, saloons, lounges, and taverns;
Snack and nonalcoholic beverage bars;
Bakeries, brewpubs, tasting rooms, taprooms, breweries, microbreweries, wineries, and distilleries at which on-site sales to the public comprise at least 33% of the gross receipts;
Inns at which on-site sales of food and beverages to the public comprise at least 33% of gross receipts; and
Licensed facilities or premises of a beverage alcohol producer where the public may taste, sample, or purchase products.
How to apply
Eligible businesses can apply through SBA-recognized third-party point-of-sale vendors or directly through the SBA using the online application portal.
Registration with SAM.gov is not required, and DUNS or CAGE identifiers are not necessary to apply for funding.
A sample application form is available for download for businesses that would like to prepare their applications. The form (Form 3172) will be completed online, but the SBA requests that businesses not submit forms at this time.
To verify tax information, businesses will be required to submit:
SBA Form 3712, Restaurant Revitalization Fund Application, completed through the SBA’s platform.
IRS Form 4506-T, Request for Transcript of Tax Return, completed and signed by the applicant. This requirement can be satisfied by completing this form on the SBA platform.
Gross receipts and eligible expenses documentation, for which, any of the following documents may be submitted:
Business tax returns (IRS Form 1120, U.S. Corporation Income Tax Return, or IRS Form 1120-S, U.S. Income Tax Return for an S Corporation);
IRS Form 1040, U.S. Individual Income Tax Return, Schedule C, Profit or Loss from Business; IRS Form 1040, Schedule F, Profit or Loss from Farming;
For a partnership, the partnership’s IRS Form 1065, U.S. Return of Partnership Income (including Forms K-1, Partner’s Share of Income, Deductions, Credits, etc.);
Externally or internally prepared financial statements such as income statements or profit-and-loss statements; and
Point-of-sale reports, including IRS Form 1099-K, Payment Card and Third-Party Network Transactions.
Eligible brewpubs, tasting rooms, taprooms, breweries, wineries, distilleries, and bakeries will need to submit documents showing evidence that on-site sales to the public comprised at least 33% of gross receipts for 2019. This may include Tax and Trade Bureau Forms 5130.9 or TTB. For businesses that opened in 2020, the applicant’s original business model should have contemplated at least 33% of gross receipts in on-site sales to the public.
Eligible inns will need to provide documents showing that on-site sales of food and beverages to the public comprised at least 33% of gross receipts for 2019. For businesses that opened in 2020, the applicant’s original business model should have contemplated at least 33% of gross receipts in on-site sales to the public.
During the first 21 days of the application period, the SBA will only process and fund applications where the applicant has self-certified that it meets the eligibility requirements for a small business that is at least 51% owned by:
2. Veterans, or
3. Socially and economically disadvantaged individuals.
Socially disadvantaged individuals - 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 - those socially disadvantaged individuals whose ability to compete in the free enterprise system has been impaired due to diminished capital and credit opportunities compared with others in the same business area who are not socially disadvantaged.
Funding details and calculations
Of the $28.6 billion appropriated to the program, specifically apportioned amounts include:
$5 billion set aside for applicants with 2019 gross receipts of $500,000 or less
An additional $4 billion set aside for applicants with 2019 gross receipts from $500,000 to $1.5 million;
An additional $500 million set aside for applicants with 2019 gross receipts of $50,000 or less.
The SBA may provide funding of up to $5 million per location, not to exceed $10 million for the applicant and any affiliated businesses. The minimum award is $1,000.
Calculations for payment are:
Calculation 1. For applicants in operation before or on Jan. 1, 2019: 2019 gross receipts minus 2020 gross receipts minus Paycheck Protection Program (PPP) loan amounts.
Calculation 2. For applicants that began operations partially through 2019*: (Average 2019 monthly gross receipts times 12) minus 2020 gross receipts minus PPP loan amounts.
Calculation 3. For applicants that began operations on or between Jan. 1, 2020, and March 10, 2021, that have not yet opened but have incurred eligible expenses: Amount spent on eligible expenses** between Feb. 15, 2020, and March 11, 2021, minus 2020 gross receipts minus PPP loan amounts.
*Entities that began operations partially through 2019 may elect to use either Calculation 2 or Calculation 3.
** Such “eligible expenses” used within this calculation are the same as those listed below as permissible expenses for the 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, not including prepayment of rent;
Business debt service, both principal and interest, not including 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; and
Business operating expenses.
For purposes of this program, gross receipts do not include:
Amounts received from first- or second-draw PPP loans;
Amounts received from Economic Injury Disaster Loans (EIDL);
Advances on EIDL (EIDL Advance and Targeted EIDL Advance);
State and local grants; or
SBA Section 1112 payments.
A Word of Caution
To the extent eligible, we recommend submitting your application as soon as possible. As this is a first-come-first-serve program, once the appropriated funds are disbursed that will close the program. We have heard from other sources that the SBA is hoping the majority of applications are submitted early so that to the extent additional funds are needed to fulfill the applications, the appropriate request can be made to Congress for an additional appropriation. Even if your business does not meet the 21-day early determination criteria for businesses with at least a 51% ownership by women, veterans, and/or socially and economically disadvantaged individuals, it is our understanding that such applications can still be submitted on May 3rd. In doing so, it is our understanding that your application will then be reviewed following that 21-day period.
However, as we saw with the Shuttered Venue Operators Grant (SVOC), such programs receive a lot of interest and can take down systems. Like the SVOC, the RRF platform was developed by the SBA, and likewise has the potential to crash depending on high traffic volumes. The concern with SVOC applicants is if the application they submitted prior to the system crash will exist when it comes back up. We have not received a definitive answer on this from the SBA. Therefore, for those businesses looking to submit an RRF application early within the process, we caution you that if a similar system crash occurs with the RRF platform, the same uncertainty of application status may exist.
At Cassady Schiller, we are prepared to help you understand how these provisions can apply to your specific situation. Accordingly, please reach out to us to see how we can help you take full advantage of this new program.