Restaurant Revitalization Fund Begins Roll Out

The Small Business Administration (“SBA”) has begun releasing information on the launch of the Restaurant Revitalization Fund (“RRF”). Similar to the Shuttered Venue Operators Grant (“SVOG”) — the portal for which went live on April 8 and was quickly shutdown due to a glitch — the RRF will provide grants to food service businesses with up to 20 locations.

The grants are limited to $5 million per location and $10 million total per business. Grants are based on the difference between revenues in 2019 and 2020, reduced by the total amount of Paycheck Protection Program (“PPP”) loans received by the business.

Businesses that were not in business in 2019 are subject to transition rules that will determine their eligibility. RRF grants do not have to be repaid as long as the funds are used for eligible expenses by March 11, 2023.

Once the portal opens, priority for applications for the first three weeks will be given to businesses owned at least 51 percent by women, veterans, or members of certain socially or economically disadvantaged groups. Applicants will self-certify that they meet the eligibility requirements.

Eligible Entities

Most food service businesses are eligible, including:

• Restaurants
• Food stands, food trucks, food carts
• Caterers
• Bars, saloons, lounges, taverns
• Snack and nonalcoholic beverage bars
• Bakeries*
• Brewpubs, tasting rooms, taprooms*
• Breweries and/or microbreweries*
• Wineries and distilleries*
• Inns*
• Licensed facilities or premises of a beverage alcohol producer where the public may taste, sample or purchase products

*With onsite sales of food and beverage to the public comprising at least 33% of gross receipts

How to Apply

Eligible businesses will be able to apply through either SBA-recognized Point of Sale Restaurant Partners or a dedicated SBA portal.

Applicants will not need to be registered for a Data Universal Numbering System (“DUNS”) number or for the federal government’s System for Award Management (“SAM”). Applying through a Point of Sale partner should cut down on application errors. A sample SBA online application form is available here.

Eligible Expenses

The Covered Period for RRF expenses runs from February 15, 2020 through March 11, 2023. Recipients that are unable to use all the funds can simply return the unused funds to the Treasury. According to the Restaurant Revitalization Fund Program Guide (which can be found here), eligible expenses include:

1. Business payroll costs, including sick leave and costs related to the continuation of group health care, life, disability, vision or dental benefits during periods of paid sick, medical or family leave and group health care, life, disability, vision or dental insurance premiums;
2. Payments on any business mortgage obligation (both principal and interest); Note: This does not include any prepayment of principal on a mortgage obligation;
3. Business rent payments, including rent under a lease agreement; (Note: This does not include any prepayment of rent);
4. Business debt service (both principal and interest); Note: This does not include any prepayment of principal or interest);
5. Business utility payments for the distribution of electricity, gas, water, telephone or internet access, or any other utility that is used in the ordinary course of business and for which service began before March 11, 2021;
6. Business maintenance expenses, including maintenance on walls, floors, deck surfaces, furniture, fixtures and equipment;
7. Construction of outdoor seating;
8. Business supplies, including protective equipment and cleaning materials;
9. Business food and beverage expenses, including raw materials for beer, wine or spirits;
10. Covered supplier costs, which is an expenditure made by the eligible entity to a supplier of goods for the supply of goods that:
    a. Is essential to the operations of the entity at the time at which the expenditure is made; and
    b. Is made pursuant to a contract, order or purchase order in effect at any time before the receipt of Restaurant Revitalization funds; or
    c. With respect to perishable goods, a contract, order or purchase order in effect before or at any time during the covered period;
11. Business operating expenses, which is defined as business expenses incurred through normal business operations that are necessary and mandatory for the business (e.g., rent, equipment, supplies, inventory, accounting, training, legal, marketing, insurance, licenses and fees). Business operating expenses do not include expenses that occur outside of a company’s day-to-day activities.

Note: Past-due expenses are eligible if they were incurred within a window beginning on February 15, 2020 and ending on March 11, 2023.

Use of Funds Validation

By December 31, 2021, applicants will have to report through the portal how much of their funds they have used in each category. If there are unused funds by that date, grantees will be required to submit annual reports until they fully expend all funds or the Covered Period expires.

We anticipate further updates until the program actually goes live. As always, we will keep you updated of these new developments as they happen. In the meantime, please contact your Friedman LLP advisor with any questions.