The SBA has launched the Restaurant Revitalization Fund program which offers restaurants, bars and other food and drink businesses grants of up to $10 million based on their lost revenue during the pandemic. The $28.6 billion program was authorized by the American Rescue Plan of 2021 and will continue until the allocated funds are exhausted.
Since opening, the SBA has been flooded with applications, so restaurants should get in their applications soon, as the program is already running out of money. That said, specific amounts have been set aside for businesses with less than $500,000 in 2019 revenue, so if your business meets that qualification you should move quickly to apply.
The SBA has provided details on eligible entities, how to apply, what kind of documentation is needed, and allowable use of funds.
A broader list of eligible entities has been identified by the SBA. Entities must not be permanently closed. The expanded list of entities includes businesses where the public or patrons assemble for the primary purpose of being served food or drink, including:
- Food stands, food trucks, food carts
- Bars, saloons, lounges, taverns
- 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
- Snack and nonalcoholic beverage bars
- *Brewpubs, tasting rooms, taprooms
- *Breweries and/or microbreweries
- *Wineries and distilleries
*For these businesses to be eligible, they must provide documentation that on-site sales to the public comprised at least 33% of gross receipts in 2019. For businesses that opened in 2020 or have not yet opened, the applicant’s original business model should contemplate at least 33% of gross receipts in on-site sales to the public.
Applicant Good Faith Certification
Grant applicants must make a good faith certification on SBA Form 3172 that:
- Current economic uncertainty makes their funding request necessary to support the ongoing or anticipated operations.
- The applicant does not have a pending application for and has not received a Shuttered Venue Operators grant from SBA, a pandemic program for arts and performance organizations.
Calculation of Grant Amount
Maximum grant amounts are $5 million per location, not to exceed $10 million total. Publicly-traded entities and entities with over 20 locations are not eligible for the grants. The minimum funding amount is $1,000. Applications requesting less than the minimum will not be accepted.
Several calculation methods are available, based on whether the business was in operation before or after January 1, 2019, or in 2020-2021 and whether the business has multiple locations. The calculations are based on eligible expenses and gross receipts and require that the amount of any PPP loans received be subtracted.
Eligible Uses of Funds
Businesses may use funds for the following expenses:
- Business payroll costs, including sick leave, group health care, life, disability, vision or dental benefits.
- Payments on the principal and interest of any business mortgage obligation, but not prepayment of principal.
- Business rent payments, including rent under a lease agreement, but not prepayment of rent.
- Business debt service of both principal and interest, but not any prepayment.
- Business utility payments for utilities used in the ordinary course of business if service began before March 11, 2021.
- Business maintenance expenses, including maintenance on walls, floors, deck surfaces, furniture, fixtures and equipment.
- Construction of outdoor seating.
- Business supplies, including protective equipment and cleaning materials.
- Business food and beverage expenses, including raw materials for beer, wine, or spirits
- Supplier costs for goods essential to operations.
- Business operating expenses that are necessary and mandatory for the business.
- Past-due expenses are eligible if they were incurred beginning on February 15, 2020, and ending on March 11, 2023.
Applicants must supply proof of gross receipts for specific periods depending on when they were in operation. All applicants must supply the following documents:
— The application: SBA Form 3172.
— Verification for Tax Information: IRS Form 4506-T.
— Documents showing gross receipts and eligible expenses, such as:
- Business tax returns (IRS Form 1120 or IRS Form 1120-S);
- IRS Form1040 Schedule C; IRS Form 1040 Schedule F;
- For a partnership: partnerships 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 reports, including IRS Form 1099-K.
- For brewpubs, tasting rooms, taprooms, breweries, wineries, distilleries, bakeries and inns, documents evidencing that onsite sales to the public comprise at least 33% of gross receipts.
- Applicants are required to report how much of their grant has been used against each eligible use category.
- Recipients must use all grant funds by March 11, 2023, on eligible expenses incurred beginning on February 15, 2020, and ending on March 11, 2023.
- A restaurant with multiple locations under the same EIN must apply for all locations in one single application.
The Restaurant Revitalization Fund program grants do not have to be repaid as long as applicants comply with the rules. Given the program ends once the $28.6 billion is exhausted and 186,200 businesses already applied the SBA is reporting that applications are approximately twice the allocated amount. So, it is important to get your application in quickly, especially if your business had less than $500,000 in 2019 revenue and could qualify for the funds set aside for smaller businesses.