Since the American Rescue Plan Act of 2021 was signed into law on March 11, 2021, restaurant owners and other eligible businesses have been eagerly waiting for the U.S. Small Business Administration (“SBA”) to make Restaurant Revitalization Fund applications available. On Tuesday, April 27, 2021, the SBA finally announced that applications will open on Monday, May 3, 2021, at 12 p.m. ET. Registration for the SBA application portal will begin on Friday, April 30, 2021, at 9 a.m. ET.

As background, the American Rescue Plan Act established the Restaurant Revitalization Fund relief program to provide $28.6 billion in grants to restaurants and other eligible businesses in order to keep entities operating. The Restaurant Revitalization Fund will provide restaurants and other eligible businesses with funding equal to their pandemic-related revenue loss up to $5 million per physical location, not to exceed $10 million total for the applicant and any affiliated businesses. Recipients are not required to repay the money as long as grant funds are used for eligible uses no later than March 11, 2023.

Eligible entities who have experienced pandemic-related revenue loss include:

Additional Criteria for Eligible Applicants 

In addition, eligible applicants must meet the following criteria:

For the first 21 days of the application period, although the SBA will accept applications from all eligible applicants, it will only process and fund applications from “priority groups.” As described by the SBA, “priority groups” include small businesses that are at least 51% owned by one or more individuals who are women, veterans, and/or socially and economically disadvantaged. However, it is worth noting that applicants are permitted to combine the different classifications in order to get to the 51% threshold. For example, if an applicant has 5 equal members each owning 20% of the business and one owner is a veteran, and two owners are women, then the SBA would consider the applicant to have met the threshold of 51% of the applicant ownership by a priority group. According to the SBA “socially and economically disadvantaged” individuals are defined as the following. 

During this initial period, the SBA will fund “priority group” applications where the applicant has self-certified that it meets the eligibility requirements. After the initial 21 days and through the exhaustion of the money in the Restaurant Revitalization Fund, the SBA will process applications from all eligible applicants in the order in which they are approved by the SBA.

In order to make sure that small businesses and those located in underserved communities receive funding under the program, SBA has set aside specific amounts of the Restaurant Revitalization Fund for certain applicants. 

Applicants in operation prior to or on January 1, 2019, are eligible to receive a grant equal to the 2019 gross receipts minus the 2020 gross receipts minus the PPP loan amounts.

Applicants that began making sales partially through 2019, are eligible to receive a grant equal to the average 2019 monthly gross receipts x 12 minus 2020 gross receipts and the PPP loan amounts.

Applicants that began making sales on or between January 1, 2020, and March 10, 2021, and applicants that have not yet opened but have incurred eligible expenses are eligible to receive a grant equal to the amount spent on eligible expenses between February 15, 2020, and March 11, 2021, minus the 2020 and 2021 (through March 11, 2021) gross receipts and also the PPP loan amounts. Applicants that began making sales partially through 2019 have the option to use this calculation instead of the one previously described.

For the purposes of the Restaurant Revitalization Fund, “gross receipts” does not include amounts received from 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), or SBA Section 1112 payments (loan payment relief provided in the CARES Act).

In addition to the application itself, an applicant must provide IRS Form 4506-T, and documentation showing the gross receipts of the business. Any of the following documents are acceptable to demonstrate gross receipts and, if applicable, eligible expenses:

For brewpub, tasting room, taproom, brewery, winery, distillery, or bakery applicants, they are also required to provide documentation evidencing that onsite sales to the public comprise at least 33% of gross receipts for 2019. This may include Tax and Trade Bureau Forms filed, state or local government forms filed, or internally created reports from inventory management, sales reporting or accounting software.  

Inn applicants are additionally required to provide documentation evidencing that onsite sales of food and beverage to the public comprise at least 33% of gross receipts for 2019. This may include internally prepared revenue or accounting reports.

 

Funds may be used for specific expenses, including:

It is important to note, an applicant is not permitted to appropriate grant funds from the Restaurant Revitalization Fund for items that were paid for by a PPP loan. This will apply to payroll expenses, mortgage payments, rent payments, business debt service, and utilities that will qualify under the PPP loan forgiveness.   

Awarded Restaurant Revitalization Fund grants must be used by the recipients by March 11, 2023, and used on eligible expenses that have been incurred beginning on February 15, 2020, and ending on March 11, 2023. If the business permanently closes during that time period, the covered period will end when the business permanently closes, or on March 11, 2023, whichever occurs sooner. If the awardee has any unused amounts from the Restaurant Revitalization Fund, they must be returned to the United States Treasury.

By no later than December 31, 2021, all recipients are required to report through the SBA application portal how much of their award has been applied against each eligible expense category. If the awardee has fully spent their grant funds prior to December 31, 2021, they will be required to certify in the application portal that the grant proceeds have been used on eligible expenses. For businesses that have not fully spent the grant proceeds prior to December 31, 2021, they will be required to submit annual reports until they have spent all of the grant funds, or the performance period has expired. It is important to note, the SBA reserves the right to request supplemental documentation from the awardee in order to validate the certification.     

There are three ways to apply for the Restaurant Revitalization Fund:

With any questions regarding this Client Alert, please contact Lippes Mathias Partner Matthew Hosford at 518.462.0110 Ext. 1446 or mhosford@lippes.com.