Financial Management and Disaster Relief
The Restaurant Revitalization Fund Program Is Here!
- Online applications begin on May 3, 2021, with $28.6 billion available in total funding, and a three-week priority period for majority-owned women, veteran, and socially and economically disadvantaged businesses. Others can apply on a first-come, first-served basis.
- Funding is in the form of grants that do not have to be paid back.
- Grant amounts are based on sales declines in 2020 (as compared to 2019), with maximum grants of $5 million per location and $10 million across an affiliated restaurant group.
- Required documentation must be submitted with each application, and funds must only be spent on eligible expenses.
Do you need assistance applying for an RRF grant?
The Restaurant Revitalization Fund (RRF) is part of the American Rescue Plan of 2021 signed into law on March 11, 2021. It allocates $28.6 billion of relief for affiliated restaurant groups with 20 or fewer locations, as well as other food and beverage establishments that provide on-premise eating and drinking experiences.
Who is eligible for the Restaurant Revitalization Fund? The RRF provides real economic relief for the restaurant sector in the form of grants that do not have to be paid back. Eligible entities include:
- Food stands
- Food trucks
- Food carts
- Tasting rooms*
- Licensed facilities or premises 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 drink*
*These businesses must meet the minimum standard of on-premise food and beverage sales of at least 33% of total revenues. This rule also applies to bakeries and inns that have on-premise service.
Sizing the grant and spending the grant funds on eligible expenses
Grant size is initially determined based on “pandemic-related revenue loss,” defined as the difference between 2020 and 2019 gross receipts. From this amount, you then deduct all amounts received under the Paycheck Protection Program (PPP) in either 2020 or 2021.
If your business was not in existence for all of 2019, annualize your average monthly sales for all of 2019 and compare it to your average monthly sales for all of 2020. If the entity opened between January 1, 2020, and March 10, 2021, calculate the expenses incurred from February 15, 2020 until March 11, 2021 — minus any gross receipts received — to determine the eligible amount. Any restaurants that have not yet opened but have incurred expenses prior to opening qualify for funding as well by itemizing all eligible expenses incurred since February 15, 2020 until March 31, 2021.
Grants can be spent on the following eligible expenses:
- Payroll costs
- Payment of principal and interest on any debt obligations
- Maintenance expenses
- PPE supplies
- Supplier costs
- Food and beverages
- Operational costs
The RRF program covers expenses over a covered period of February 15, 2020 through March 11, 2023. If grant money is not spent on allowable costs by the end of the covered period, it is to be repaid by the end of the covered period. The program will require an annual reporting of amounts spent from the grant monies distributed indicating type of expense, amount, date, and purpose each year until all the grant money has been spent by the business.
When and how to apply
On May 3, the Small Business Administration (SBA) portal will be available to accept online applications for the RRF program. It is important for applicants to register prior to submitting their application on the portal and registration is available as of April 30. Even though there is a three-week priority period for processing applications for certain priority groups, it is recommended to submit your application as soon as possible and not wait until the priority period has completed. Once your application has been submitted, it will be in queue to be processed at the end of the priority period.
Before you start to submit the application on-line, download the SBA Form 3172 and fill out the pdf form and assemble the required information in pdf format:
- Tax return from 2019 for tax identifying information and gross receipts support
- Tax return from 2020 (or POS report or income statement prepared internally or externally) to support gross receipts
- Information regarding any Economic Injury Disaster Loan (EIDL), state and local, or SBA Section 1112 payments that must be subtracted from gross receipts in the year received.
- Information regarding any PPP loans received (First and Second Draw), including amount and loan number which must be subtracted from gross receipts in 2020 for all amounts received by entity.
- For businesses with the 33% required gross receipts test, gather sales tax returns proving gross receipts of 33% or more for food and beverages sold as a percentage of total revenues for the establishment.
When you submit your application, you must attest that the grant is necessary to support ongoing operations, given the uncertainty of current economic conditions. And, you must confirm that you have not also applied for or received a grant under the Shuttered Venue Operators program.
How we can help
CLA’s team of professionals is available to help you determine eligibility, grant sizing, and eligible costs for the RRF program. We can provide consultation regarding the application process, and outsourced assistance for eligible expenses tracking. We’re here to help you navigate the interplay of the RRF with the PPP forgiveness process and the ERC program — and help you find opportunities that can benefit your restaurant organization.