Restaurant Revitalization Fund (Updated)

Co-authored by Joseph Begin

Note: An earlier version of this article, which is superseded and updated with this one, was published on March 31, 2021.

The American Rescue Plan Act of 2021 that was signed into law on March 11, 2021 included a $28.6 billion Restaurant Revitalization Fund (RRF) that will provide grants of up to $10 Million per entity or $5 Million per location for a variety of food service businesses including restaurants, bars, food trucks, tasting rooms, caterers, food carts, pubs and taverns. Additional guidance recently provided on the SBA website allows these businesses to qualify for grants if at least 33% of their sales are to the general public for onsite consumption.

The grants will be based on a straight drop of gross receipts from 2019 to 2020, less any amounts received from first and second draw Payroll Protection Program (PPP) loans. A restaurant that saw its gross receipts drop from $2 Million in 2019 to $1 Million dollars in 2020 would have a tentative grant award of $1 Million. It would then reduce the $1 Million dollars by the total PPP Loan funds from draws 1 and 2 (in total $600,000) to receive a Restaurant Revitalization Grant of $400,000.

The guidance also explains how businesses that were not in operation during 2019 or for only part of 2019 or 2020 could qualify and how their grant awards would be determined. The RRF should be particularly helpful for businesses that opened in 2020 or 2021 because many of these businesses may not have met the eligibility requirements for a PPP Loan.

Grants may be used for a wide variety of business expenses including payroll, rent, utilities, supplies, maintenance, construction to accommodate outdoor seating, food costs, supplier costs, operational expenses or anything else the SBA determines is essential in maintaining the business. Because this allows for a lot more leeway in terms of eligible expenses than PPP Loans, many businesses can easily use both programs in conjunction with one another despite the requirement that you cannot use the same expense for both PPP Loan and Restaurant Revitalization Fund forgiveness.

Given the overall effect of the pandemic on the restaurant industry, competition for these grants will be fierce. Applicants can apply through SBA recognized Point of Sale Restaurant Partners or directly thru the SBA’s online application portal. Special prioritization will be given to entities controlled by women, veterans and socially and economically disadvantaged individuals during the first 21 days of the grant process. Any eligible business may apply during this period, but the SBA will only process and fund priority applications. However, since the SBA will process non-priority applications in the order they are received, it makes sense for even non-priority applicants to submit during the first 21 day period. As of April 19, 2021, the actual date the website will be open to accept applications has still not yet been announced.

We recommend that potential applicants review sample application SBA Form 3172. In addition to filling out this form online, applicants will need to submit the following information:

  • IRS Form 4506-T, Verification of Tax Information
  • Gross Receipts or Eligible Expense Documentation if applicable:
    • Relevant business or individual Tax Returns
    • Bank Statements
    • Externally or internally prepared financial statements
    • Point of Sale reports, including IRS Form 1099-K
  • For inns, brewpubs, tasting rooms, taprooms, breweries, wineries, distilleries, or bakeries:
    • Documentation substantiating that onsite sales to the public comprise at least 33% of the total gross receipts for 2019

RRF funds must be used for eligible expenditures by March 11, 2023. Any funds not used for qualified expenditures within this time period must be returned.

For more information, please contact your BNN tax service provider at 800.244.7444.

Disclaimer of Liability: This publication is intended to provide general information to our clients and friends. It does not constitute accounting, tax, investment, or legal advice; nor is it intended to convey a thorough treatment of the subject matter.