How to Apply for a Restaurant Revitalization Fund Grant
By Bill Cunningham
The recently signed American Rescue Act of 2021 includes the new Restaurant Revitalization Fund (RRF) program that provides grants totaling $28.6 billion to small food businesses that have been impacted by the pandemic. These grants do not need to be repaid as long as the funds are spent on eligible expenses incurred between February 15, 2020 and March 11, 2023. They are also non-taxable income for federal income tax purposes.
This new grant program is available to those businesses with the primary purpose of serving food or drink to their patrons and are not permanently closed. This includes restaurants, food stands, food trucks, food carts, snack and nonalcoholic beverage bars (ice cream shops, coffee shops, etc.), bakeries, caterers, saloons, inns, taverns, bars, lounges, brewpubs, tasting rooms, taprooms, breweries, wineries, or distilleries. It includes food service businesses in airport terminals and food service businesses that are tribally owned.
If your business is a bakery, brewpub, tasting room, taproom, brewery, winery, distiller, or inn, at least 33% of your gross receipts must come from on-site food and beverage sales to the public.
Businesses that are not eligible include: i) State or local government-operated food businesses, ii) businesses that own or operate more than 20 locations as of March 13, 2020, iii) businesses that have received a SVOG grant, iv) publicly traded companies, v) nonprofits, and vi) grant rewards less than $1,000.
This blog post will answer the following five questions:
- How do I calculate the amount of my potential RRF grant?
- What documents do I need?
- What do I need to apply for a RRF grant?
- How to I apply for a RRF grant?
- Where can I get more information regarding RRF grants?
How do I calculate the amount of my potential RRF grant?
There are three business scenarios for calculating a RRF grant depending on when the eligible entity started or plans to start operations.
- Calculation 1: Eligible business that was operating on or before January 1, 2019.
- Calculation 2: Eligible business that began operations during 2019.
- Calculation 3: Eligible business that started operations between January 1, 2020 and March 10, 2021 OR had not yet opened as of March 10, 2021 but has incurred eligible expenses.
RRF grants are reduced by any 2020 and 2021 PPP loans received by the eligible entity. The combined RRF grants of an eligible entity and its affiliates is capped at $10 million. Each physical location owned or operated by an eligible entity is capped at $5 million.
Gross receipts do not include PPP forgiveness amounts, PPP loans, SBA Section 1112 debt relief payments (payments made by the SBA for monthly principal and interest on 7(a) loans, 504 loans, or microloans in 2020 and 2021), EIDL loans, EIDL advances, Targeted EIDL advances, other grants received via the CARES Act, and state and local business grants.
To determine the potential grant, Line 1 is calculated differently depending on which of the three above business scenario applies. Then the rest of the calculation is the same for all three scenarios.
Calculation 1: Eligible business that was operating on or before January 1, 2019.
This input should equal the gross receipts for 2019.
Calculation 2: Eligible business that began operations during 2019.
This input should equal the gross receipts for 2019.
Calculation 3: An eligible business that started operations between January 1, 2020 and March 10, 2021 OR has not yet opened but as of March 10, 2021 has incurred eligible expenses.
The rest of the calculation:
What documents do I need?
You will need several of these documents to support your gross receipts calculation for 2019 and 2020. The SBA prefers the business tax returns and point of sales reports, however, they will accept financial statements but that may delay the review of your application past 14 days.
- Business tax returns: IRS Form 1120 or 1120-S for C-Corps, IRS Form 1120-S for S-Corps, IRS Form 1040 Schedule C, IRS Form 1040 Schedule F, or IRS Form 1065, including K-1s, for partnerships
- 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 room, taproom, brewery, winery, distillery, bakery or inn, the applicant is required to provide documentation that at least 33% of gross receipts for each year included onsite sales to the public. Documentation may include filed Tax and Trade Bureau reports, financial statements, or point of sale reports.
To document eligible expenses for Calculation 3, the SBA prefers a CPA Comfort Letter or payroll records (IRS Form 941s), copies of invoices and payments for outdoor seating expenditures and other eligible expenses, and business debt lender loan statements. Although it will delay the review process, the SBA will accept externally or internally prepared financial statements signed, dated, and certified for accuracy by the applicant.
What do I need in preparation to apply for a RRF grant?
All RRF grant applicants should attempt to submit their applications as soon as the SBA portal is live. Here is a list of documents that applicants should prepare or have available to complete the online application:
- Draft of the SBA Form 3172 Restaurant Revitalization Funding Application.
- Ownership information for all owners who own 20% or more of the entity’s equity. Information should include name, SSN, percentage of ownership, and home address. I would suggest that they also have a PDF of the front and back of their drivers’ license which has been required for other SBA programs.
- Copies of their PPP loan agreements. The application requires the amount and the SBA PPP Loan Number.
- The date your business opened for operations.
- Documentation (depending on when your business opened or has yet to open) noted above to calculate your grant amount.
- Valid EIN, SSN, or ITIN number. This tax identification number should be the same used for your tax returns and your PPP loan applications.
- Three months of bank statements. This will be the last three months of bank statements and will probably be for the bank where the grant funds will be deposited.
How do I apply for a RRF grant?
As of this writing, the SBA has not opened their portal to accept RRF grant applications. It is strongly recommended that you either check the SBA restaurant website regularly or sign up for SBA RRF grant updates emails.
When the SBA is ready to accept applications, all eligible businesses will be able to submit their applications three different ways:
- Directly through the SBA platform at restaurant.sba.gov
- Through a Point-of-Sale Vendor SBA partner
- Through the telephone at 844-279-8898
During the first initial 21 days, the SBA will prioritize awarding grants to: women-owned, veteran-owned, and socially or economically disadvantaged-owned eligible businesses. Owner(s) that meet one or more of these three categories must own at least 51% of the business and control the daily business operations. The SBA will begin evaluating all other applications on Day 22. It is important not to wait for day 22 to submit your application.
List of Eligible Costs
During the RRF Covered Period (February 15, 2020 to March 11, 2023), an eligible entity may use the grant funds for the following costs incurred as a direct result of or during the COVID-19 pandemic:
- Payroll costs, including paid sick leave, as defined under the PPP program excluding Employee Retention Credits and COBRA Credits
- Payments of principal and interest of mortgage obligations (prepayments are not allowed)
- Rent payments (prepayments are not allowed)
- Utilities payments for the distribution of electricity, gas, water, telephone, internet access, or any other utility that is used in the ordinary course of business for which service began before March 11, 2021
- Maintenance expenses including maintenance on walls, floors, deck surfaces, furniture, fixtures, and equipment
- Construction of outdoor seating
- Supplies, including protective equipment and cleaning materials
- Food and beverage expenses within the scope of normal business practices
- Covered supplier costs as defined under the PPP program
- Business operational expenses including insurance, delivery costs, marketing, fees, licenses, legal and POS equipment, etc.
Where can I get more information regarding RRF grants?
The SBA has a website specifically for the Restaurant Revitalization Fund program. The following are key links for the following:
For some small business owners, filing for a RRF grant, SVOG grant, EIDL loan, PPP loan or forgiveness, or another SBA loan program may still seem overwhelming. If you feel that way, request assistance for a SCORE Rhode Island Mentor. SCORE Rhode Island is a chapter of SCORE, a national organization and a SBA’s resource provider. SCORE Rhode Island is a volunteer organization providing free mentoring and educational services to small businesses in Rhode Island and South Coast Massachusetts.
For more than 50 years, SCORE has helped more than 11 million aspiring entrepreneurs and small business owners through mentoring and business workshops. More than 11,000 volunteer business mentors in more than 300 chapters serve their communities.
Like what you are reading?
Subscribe to Rhode Island SCORE's twice monthly blog posts click here to Subscribe >