The U.S. Small Business Administration (SBA) is targeting early April to launch a phased rollout of the $28.6 billion Restaurant Revitalization Fund (RRF). Eligible expenses are those incurred from February 15, 2020 to December 31, 2021 , or a date determined by the SBA. If all grant funds are not spent by the business, or the business permanently closes before the end of the covered period, the business must return unused funds to the Treasury

The American Rescue Plan Act, P.L. 117-2, created the RRF to provide restaurants with grants equal to their pandemic-related revenue loss, up to $10 million per entity, or $5 million per physical location. An eligible business may receive a tax-free federal grant equal to the amount of its pandemic-related revenue loss , calculated by subtracting its 2020 gross receipts from its 2019 gross receipts.

  •  If the business is not in operation for the entirety of 2019, the total is the difference between 12 times the average monthly gross receipts for 2019 and the average monthly gross receipts in 2020 (or a formula from the SBA).
  •  If the business is not in operation until 2020, it can receive a grant equal to the amount of “eligible expenses” subtracted by its gross receipts received (or a formula from the SBA).
  • If the business is not yet in operation as of the application date, but it has made “eligible expenses” the grant would be made equal to those expenses (or a formula from the SBA).

Patrick Kelley, associate administrator for the SBA’s Office of Capital Access, told committee members that the SBA is working on developing a technology solution capable of deploying hundreds of thousands of grants to restaurants, bars, and other eligible providers of food and drink.

The SBA is aiming to work with the White House Office of Management and Budget (OMB) to build a platform scaled in a way that it can leverage partners such as point-of-sale vendors, which can provide relevant sales data, Kelley said. The new platform could use that information to help automate parts of the application and grant calculation process.

“By drafting off (the point-of-sale vendors) and posting our own web application, we believe we can reach the broadest market segment fast,” Kelley said.

Ideally, he said, the SBA would be able to begin posting RRF information soon, such as guidance and required documentation, relevant to potential applicants. The program would then move to a pilot phase, in which the program would begin accepting applications based on prioritization established in the American Rescue Plan Act, which sets aside $5 billion for the smallest applicants ($500,000 or less in 2019 gross receipts) and requires that during the first 21 days of the grants, the SBA will prioritize applications from restaurants owned and operated or controlled by women, veterans, or socially and economically disadvantaged individuals.

After the prioritization /pilot phase, grants would become available more broadly.

“That would typically unfurl over 30 to 45 days,” Kelley said.

Eligibility

If you own or operate 20 or fewer establishments (together with any affiliated business), regardless of ownership type of the locations and whether those locations do business under the same or multiple names, as of March 13, 2020. An affiliated business has an equity or right to profit distribution of 50 percent or more, or has contractual authority to control the direction of the business, provided that such affiliation “shall be determined as of any arrangement or agreements in existence as of March 13, 2020”.

  •  Eligible entities include a 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, or other similar place of business in which the public or patrons assemble for the primary purpose of being served food or drink.
  • Entities can apply using their existing business identifiers, as the SBA will avoid imposing additional burdens on applicants.
  •  Public traded companies are ineligible.
  •  Entities must submit a good faith certification that:
  •  Uncertainty of current economic conditions makes necessary the grant request to support the ongoing operations.
  •  The entity has not applied for nor received a “Shuttered Venue Operators” grant (generally for performing arts, live venues, theaters, etc.).

The grant funds may 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.

Restaurant and bar owners need to prepare now

While the launch date may not be set, restaurant owners have a few things they should be doing now to get ready for the application process. Those that want to apply for grants should register with the government using the System of Award Management (SAM) if they are not already.

To get on the SAM system, owners and operators should follow these steps:

  • First, create a login.gov user account. This login account can help you interact with the SBA and other federal agencies.
  • Second, sign up to receive a DUNS number. The DUNS number assignment is free, but it is required for all businesses who want federal contracts or grants. This typically takes 1-2 days to process.
  • Using your login.gov email, DUNS number, and standard business info such as your Taxpayer Identification Number (TIN) and Taxpayer Name, register with SAM. It can take up to 2 weeks to be fully set up on SAM.

You should work with an accountant to prepare paperwork that clearly shows your gross revenue loss in 2020 as compared to 2019.

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