The SBA is opening applications for the Restaurant Revitalization fund next week. Here’s a guide to help you prepare.
On March 11, 2021, President Biden signed the American Rescue Plan Act into law. The stimulus bill established the $28.6 billion Restaurant Revitalization Fund (RRF) for small to mid-sized food and beverage establishments economically impacted by the pandemic. The U.S. Small Business Administration (SBA) will begin accepting applications from eligible establishments Monday, April 3rd, 2021, after 12 PM ET. To help you prepare, we broke down essential details you need to know while getting your application together. For complete information about the fund and the application process, make sure to read the Restaurant Revitalization Fund Guide here.
Below is a list directly from the RRF Guide. Most types of food and beverage establishments are eligible, but there are essential details that can disqualify businesses in this list. Make sure to read the eligibility limitations and ineligible establishment sections to be sure you qualify.
• Food stands, food trucks, food carts
• Bars, saloons, lounges, taverns
• Licensed facilities or premises of a beverage alcohol producer where the public may taste, sample, or purchase products
• Other similar places of business in which the public or patrons assemble for the primary purpose of benign served food or drink
• Snack and nonalcoholic beverage bars
• Wineries and distilleries
• Any establishment listed above operating under a franchise documented in the SBA Franchise Directory, with an identifier code that proves the franchise is eligible under the other eligibility requirements set by the SBA
• Any establishments listed above located in an airport terminal or located inside another business but independent of that business with separate tax identification numbers or tribally-owned concern
Bakeries, brewpubs, tasting rooms, taprooms, breweries, microbreweries, wineries, distilleries, and Inns, are only eligible for funding if onsite sales of food and drinks were 33% of total gross receipts in 2019. If your business opened in 2020 or hasn’t opened yet, you need documentation showing your original business plan considers on-site food and beverage sales to make up 33%.
The Restaurant Revitalization Fund was created to help struggling small to medium-sized businesses, so not everyone will qualify for funding. Here is a list of disqualifiers from receiving a grant:
• You own or operate more than 20 locations as of March 13, 2020 — whether the locations operate under the same name, different names, or different business types
• Your business is a publicly-traded corporation or is majority-owned by a publicly traded corporation
• Your company filed a Chapter 7 bankruptcy
• Your company filed a chapter 11, 12, or 13 bankruptcy but isn’t operating with an approved reorganization plan
• Non-profit organizations
• Your funding request is less than $1,000 or over $5 Million per location that would put the applicant and affiliated businesses beyond the $10 million cap
Calculation of Funding.
The RRF application includes a section for applicants to calculate the amount of funding they are requesting. There are three different calculations to cover businesses that began operations before 2019, partially through 2019, after 2020, or have not yet opened. Here is a breakdown of the calculations. If it seems confusing now, don’t worry. The RRF Application provides a straightforward walkthrough of which calculation to use and what to include.
Calculation 1: Businesses operating before or on January 1, 2019
If your business falls under this category, you will include the total gross receipts as reported in your 2019 and 2020 Federal tax returns, as well as any funding received from PPP loans in 2020 or 2021.
2019 gross receipts – (2020 gross receipts + PPP loans) = funds requested
Calculation 2: Businesses operating partially through 2019
If your business falls under this category, the RRF guide states that you can choose to use this calculation, or the third option. For calculation 2, you will need your annualized 2019 gross receipts and 2020 gross receipts as reported on your Federal tax returns and any funding received from PPP loans in 2020 or 2021.
To figure out your annualized 2019 gross receipts, follow the formula below.
(2019 gross receipts ÷ #of operational months in 2019) X 12 = annualized 2019 gross receipts
Now, you can calculate the amount of funding you are requesting.
Annualized 2019 gross receipts – (2020 gross receipts + PPP loan funding) = requested funding.
Calculation 3: Businesses operating between January 1, 2020 – March 10, 2021, and businesses that have not opened yet, but have incurred eligible expenses.
As mentioned, businesses that began operations partially through 2019 can use calculations 2 or 3. If you use this calculation, you will need the total amount spent on eligible expenses, total gross receipts as of March 11, 2021, and the amount received from PPP loans in 2020 or 2021.
Eligible expenses – (gross receipts as of March 11,2021 + PPP Loans) = requested funding
SBA Form 3172 and IRS Form 4506-T
All applications must complete, initial, and sign the SBA Form 3172 (the application form for the Restaurant Revitalization Fund). In addition, applicants need to include a completed and signed IRS Form 4506-T for Verification of Tax Information.
The RRF Guide states that both SBA Form 3172 and IRS Form 4506-T will be satisfied if the applicant completes this form digitally through the SBA Platform.
Applicants will need to provide proof of gross receipts depending on which calculation they use to determine the funding amount requested. Below is a break down:
• Calculation 1: documentation of gross receipts in 2019 and 2020
• Calculation 2: documentation of gross receipts in 2019 and 2020
• Calculation 3: documentation of gross receipts and eligible expenses incurred for as long as the business has been operational.
The SBA will accept tax returns, IRS forms 1040 Schedule C or F, Partnership’s IRS Form 1065, Bank statements, externally or internally prepared financial statements, POS reports including IRS form 1099-K as documentation of gross receipts in applications.
Evidence of onsite sales make-up 33% of gross receipts
In addition to the documents listed above, brewpubs, bakeries, wineries, distilleries, breweries, tasting rooms, taprooms, and Inns need to include evidence that on-site sales comprise at least 33% of gross receipts.
The SBA is accepting documents in the form of “2019 Tax and Trade Bureau (TTB) Forms filed, state or local government forms filed, or internally created reports from inventory management, sales reporting, or accounting software.” If your business is an Inn, the SBA is accepting accounting reports or internally created revenue reports as evidence.
How to Apply
Option 1: Apply through a POS Restaurant Partner
The SBA partnered with the POS Systems: Toast, Square, NCR Corporation, and Clover to make applying more straightforward for the restaurants that use them.
When the SBA begins accepting applications, businesses can work with their POS software provider to submit their application. In a recent press release, the SBA stated, “Each point-of-sale partner is helping in different ways – from providing a fully integrated application experience, to building pre-packaged point-of-sale documentation, to holding interactive webinars.” If this is how you will apply for the Restaurant Revitalization Fund, it’s essential to connect with your POS provider today.
Option 2: Apply online at restaurants.sba.gov
If you are not using a restaurant partner listed above, you can create an account and apply through the SBA’s application portal at restaurants.sba.gov. Businesses can register accounts starting Friday, April 30th after 9 AM ET, but applications will not open until Monday, May 3rd after 12 PM ET.
After completing and submitting the application with uploaded documents, the SBA will email a DocuSign package to be completed immediately before the application review process begins. The RRF guide states that businesses can check on the status of their application through their accounts on the online portal.
Option 3: Apply by phone
The SBA is accepting applications telephonically through the number (844) 279-8898. A support agent will walk applicants through a questionnaire and attestation portion, then mail an application with signature documents. The applicants must send back a complete and notarized application to the SBA. Upon receiving the application, the SBA will begin the review process.
The Restaurant Revitalization Fund is an important step to helping restaurants get through the pandemic — and these grants are going to go quickly. Preparation is critical, so take time this week to read the SBA’s RRF Guide, review the sample application, gather all the required documents, and plan out how you will apply.