When Can Restaurants Apply for Grants Under the Restaurant Revitalization Fund?

The Small Business Association (SBA) expects to launch the Restaurant Revitalization Fund (RRF) sometime later this month…

The Small Business Association (SBA) expects to launch the Restaurant Revitalization Fund (RRF) sometime later this month, according to officials. The new program, which was established under the American Rescue Plan Act, aims to help restaurants who have suffered revenue losses due to the COVID-19 pandemic.

Funding Available Under the Restaurant Revitalization Fund

The new $28.6 billion Restaurant Revitalization Fund reflects the fact that restaurants have been particularly hard hit by the pandemic. Faced with mandatory closures and capacity restrictions, restaurants have struggled to stay afloat.

The American Rescue Plan Act authorized the SBA to make grants of up to $10 million ($5 million per physical location) to eligible entities and their affiliated businesses to cover pandemic-related losses. A total of $5 billion will be devoted exclusively to entities with 2019 gross receipts of less than $500,000.

Under the American Rescue Plan Act, pandemic-related losses are generally defined as the gross receipts of the eligible entity during 2020 subtracted from the gross receipts of the eligible entity in 2019. If an entity was not operating for all of 2019, the maximum grant value is the average monthly gross receipts in 2020 minus the average monthly gross receipts in 2019. If an eligible entity has not yet opened as of the date of the grant application, but has incurred expenses, it may be eligible for a grant in the amount of those expenses, or an amount based on a formula determined by SBA. According to the SBA, recipients are not required to repay the funding as long as funds are used for eligible uses no later than March 11, 2023.

Eligibility for Grants Under the Restaurant Revitalization Fund

To be eligible for the RRF, entities must fall into one of the following categories: “restaurant, food stand, food truck, food cart, caterer, saloon, inn, tavern, bar, lounge, brewpub, tasting room, taproom, licensed facility or premise of a beverage alcohol producer where the public may taste, sample, or purchase products” and  “other similar places of business in which the public or patrons assemble for the primary purpose of being served food or drink.”

Certain entities are unable to participate in the RRF. They include publicly-traded companies and those owned by a state or local government. Additionally, entities that operate more than 20 restaurants are ineligible.

For entities that do qualify, RRF grantscan be used to pay for the following eligible expenses:

• Payroll costs;
• Principal and interest payments on a mortgage, not including any prepayments on principal.
• Rent payments, not including prepayments;
• Utilities;
• Maintenance expenses including construction to accommodate outdoor seating and walls, floods, deck surfaces, furniture, fixtures, and equipment;
• Supplies including personal protective equipment and cleaning materials;
• Food and beverage expenses within the eligible entity’s scope of normal business practice before the covered period, which runs from Feb. 15, 2020, through Dec. 31, 2021, or another date as determined by the SBA;
• Covered supplier costs;
• Operational expenses;
• Paid sick leave; and
• Any other expenses the SBA determines to be essential to maintaining the eligible entity.

What’s Next?

In testimony before the Senate Small Business Committee on March 24, Patrick Kelley, associate administrator for the SBA’s Office of Capital Access, stated that preliminary instructions and guidance would be posted within 7-10 days. A Program Guide was subsequently issued by the SBA on April 20^th, 2021. Once the SBA is ready to accept applications, priority will be given to businesses owned and controlled by women and veterans, and socially and economically disadvantaged small businesses. After the initial 21-day priority period, the SBA will then open the program to all eligible applicants, and process applications based on the order received. The program will last until funds are exhausted.

If you have questions, please contact us

For detailed guidance on applying for a Restaurant Revitalization Fund grant, we encourage you to contact the Scarinci Hollenbeck attorney with whom you work or feel free to contact me, Jorge de Armas, directly, at 201-896-4100.