The COVID-19 pandemic has disrupted industries of all types, but perhaps none more so than the restaurant industry. From national chains to local diners, restaurants across the country have dealt with limitations on their operations that seem to be constantly changing. On top of these whiplash-inducing shifts, restaurants have also experienced significant losses in revenue.

After a very bleak year, there finally appears to be a light at the end of the tunnel for restaurants and bars. In addition to loosening restrictions and dropping COVID-19 rates, the federal government recently passed the American Rescue Plan Act, which established the Restaurant Revitalization Fund (RRF) to aid struggling businesses in the food and beverage industry.

Which Businesses Are Eligible for the RRF?

The Small Business Administration (SBA) website states that the following businesses could be eligible, if they endured pandemic-related losses:

  • Restaurants
  • Food stands, food trucks, food carts
  • Caterers
  • Bars, saloons, lounges, taverns
  • Snack and nonalcoholic beverage bars
  • Bakeries (onsite sales to the public comprise at least 33% of gross receipts)
  • Brewpubs, tasting rooms, taprooms (onsite sales to the public comprise at least 33% of gross receipts)
  • Breweries and/or microbreweries (onsite sales to the public comprise at least 33% of gross receipts)
  • Wineries and distilleries (onsite sales to the public comprise at least 33% of gross receipts)
  • Inns (onsite sales of food and beverage to the public comprise at least 33% of gross receipts)
  • Licensed facilities or premises of a beverage alcohol producer where the public may taste, sample, or purchase products

How Much Can Businesses Receive?

Through the RRF, the SBA can give businesses anywhere from $1,000 to $5 million per location, but the total amount per entity will not exceed $10 million.

Most businesses applying for the RRF will use this calculation to estimate the amount they will receive:

2019 gross receipts minus 2020 gross receipts minus PPP loan amounts

Businesses that opened during 2019 can use one of two calculations:

  1. (Average 2019 monthly gross receipts x 12) minus 2020 gross receipts minus PPP loan amounts
  1. Amount spent on eligible expenses between February 15, 2020 and March 11, 2021 minus 2020 gross receipts minus 2021 gross receipts (through March 11, 2021) minus PPP loan amounts

Businesses that opened during 2020 will use option 2 above.

How to Apply

Businesses can apply for RRF awards two ways:

  1. Directly through the SBA’s portal at https://restaurants.sba.gov.
  2. Through their point of sale (POS) provider, if it has been recognized by the SBA. Recognized providers include Square, Toast, Clover, and NCR Corporation (Aloha).

Documents to Submit Along with Application:

  • 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 1120-S)
    • IRS Forms 1040 Schedule C; IRS Forms 1040 Schedule F
    • For a partnership: partnership’s 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

Brewpubs, tasting rooms, taprooms, breweries, wineries, distilleries, inns, and bakeries applying for the RRF must submit documents that prove that their onsite sales comprise at least 33.00% of gross receipts for 2019.

Application Dates

The SBA began accepting applications for the RRF on Monday, May 3, 2021. For the first 21 days, it will only process applications from priority groups, which include small businesses at least 51% owned by one or more women, veterans, socially disadvantaged individuals (people who have experienced bias or prejudice based on their identity), or economically disadvantaged individuals (people with diminished opportunities to receive capital or credit).

After the first 21 days, the SBA will process all applications in the order in which they are received.

How Can the Funds Be Used?

Businesses that receive funding through the RRF can use that money to cover:

  • Business payroll costs (including sick leave)
  • Payments on any business mortgage obligation
  • Business rent payments (note: this does not include prepayment of rent)
  • Business debt service (both principal and interest; note: this does not include 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
  • Business operating expenses

As always, CRI’s advisors are here to assist you if you have questions about how the RRF could help your business or need help applying. Contact us here!