No one needs to tell those in food and beverage how much the restaurant industry has been hurt by the COVID-19 pandemic. Due to social distancing measures and out of an abundance of caution to prevent virus spread, dining out dropped drastically. “The year-over-year decline of seated diners in restaurants in the U.S., compared to 2019, was 13.74 percent on April 25, 2021,” according to Statista.
But thanks to the $28.6 billion in grants from the Restaurant Revitalization Fund program, a part of the $1.9 trillion American Rescue Plan Act aid package passed by Congress in February, help for restaurants is on its way.
Regardless of whether your restaurant already received PPP funding, whether in the first or second round of grants, you can apply for the Restaurant Revitalization Fund money and in this guide, we’ll walk you through how to do just that.
Mark Your Calendar
Applications for the Restaurant Revitalization Fund will open at noon ET on Monday, May 3 through the Small Business Administration (SBA) website. However, the portal will officially open in advance on Friday, April 30 at 9 a.m. ET.
How To Determine Eligibility
According to the SBA, the following businesses are eligible for Restaurant Revitalization Funds:
- Food stands, food trucks, food carts
- 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 a sample or purchase products
Do some applicants get priority?
To help women, veterans, and the socially disadvantaged, the SBA is giving priority to those groups provided their businesses are owned by at least 51 percent of those individuals.
Those looking to qualify under those characteristics will be asked to self-certify on their application. To meet the criteria, the SBA says that socially disadvantaged individuals are defined as “those who have been subjected to racial or ethnic prejudice or cultural bias because of their identity as a member of a group without regard to their individual qualities.” Economically disadvantaged individuals are those “whose ability to compete in the free enterprise system has been impaired due to diminished capital and credit opportunities as compared to others in the same business area who are not socially disadvantaged.”
The priority period of funding will last from day 1 through 21. The SBA says it will fund the rest of the applicants accepted from day 22 until the fund is depleted.
How much can an applicant expect to get?
For small business restaurant owners, the biggest concern is how much money they can expect to receive from a Restaurant Revitalization Fund grant. As with PPP funding, the SBA reports that grants will vary from business to business and will be based on the following criteria:
For applicants in operation before or on January 1, 2019:
2019 gross receipts minus 2020 gross receipts minus PPP loan amounts
For applicants that began operations partially through 2019:
(Average 2019 monthly gross receipts x 12) minus 2020 gross receipts minus PPP loan amounts
For applicants that began operations on or between January 1, 2020, and March 10, 2021, and applicants not yet opened but have incurred eligible expenses:
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
The minimum amount that will be sent out is $1000. And the SBA will fund up to $5 million per location. And no more than $10 million total for the applicant.
The receipt of past PPP funds (first or second draw) should not be included in gross receipts calculations. Nor should state grants or Economic Injury Disaster Loans (EIDL) or advances on EIDL or SBA Section 1112 payments.
What can an applicant use their funds on?
Staying within compliance with the allotted funding should be considered by any potential Restaurant Revitalization Fund applicant. Before submitting an application, understand that the money received can only be used for the following expenses until March 11th, 2023, according to the SBA rules:
- 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
How to submit an application
Those who qualify should take advantage of the Restaurant Revitalization Fund by submitting an application as soon as possible. To do so, applicants should go to the SBA-recognized Point of Sale (POS) vendors or directly via SBA in a forthcoming online application portal: https://restaurants.sba.gov.
Prepare to have the following documents and information handy to make the application process as smooth as possible:
- IRS Form 4506-T, completed and signed by Applicant or you can complete the form on the SBA site.
- For the purpose of gross receipts and eligible expenses any of the below as applicable:
- 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
If you run into problems or have additional questions while getting started on your application, the best solution is to reach out to an expert with years of financial experience, a trusted accountant who understands taxes and government grants. They can help you get the resources you need to help your restaurant succeed.