Last week, I wrote about the Small Business Administration’s (SBA’s) draft application for the $28.6 billion Restaurant Revitalization Fund (RRF) program promulgated under the American Rescue Plan Act of 2021.  Over the weekend, the SBA shared long-awaited details on the program, including a sample application and program guide for applicants.  Details on application requirements, eligibility, and the program guide are now available at: Restaurant Revitalization Fund.

Application

Ahead of the program launch and over the next two weeks, the SBA will conduct a 7-day pilot period where the SBA will address any technical issues ahead of the launch.  Applicants will be able to submit applications as soon as the program opens, but the SBA will prioritize applications from businesses owned by women, veterans, and economically disadvantaged individuals for the first 21 days.  After the first 21 days, the SBA will accept applications from all eligible participants and process applications in the order in which they are approved by the SBA. The SBA has not announced an official launch date for the program.

Applicants will be able to apply through SBA-recognized Point of Sale Restaurant Partners or directly via the SBA’s forthcoming online application portal.  While the SBA is not currently accepting applications, a sample application can be found on the SBA’s website.  Applicants must complete the application (SBA Form 3172) and provide the following additional documentation with their application:

1. IRS Form 4506-T (completion of this form digitally on the SBA platform will satisfy this requirement); and
2. Gross receipts documentation demonstrating gross receipts and, if applicable, eligible expenses. Gross receipts documentation includes business tax returns, IRS Form 1040 Schedule C, IRS Form 1040 Schedule F, a partnership’s IRS Form 1065 (including K-1s), bank statements, externally or internally prepared financial statements, and point of sale reports (including IRS Form 1099-K).
3. Brewpub, tasting room, taproom, brewery, winery, distillery, or bakery applicants must provide confirming documentation that onsite sales to the public comprise at least 33% of gross receipts.
4. Inn applicants must provide confirming documentation that onsite sales of food and beverage to the public comprise at least 33% of gross receipts.

Eligible Entities

Eligibility for the program is confined to those entities that have experienced pandemic-related revenue loss.  Eligible entities include: (1) restaurants; (2) food stands, food trucks, food carts; (3) caterers; (4) bars, saloons, lounges, taverns; (5) snack and nonalcoholic beverage bars; (6) bakeries; (7) brewpubs, tasting rooms, taprooms; (8) breweries and/or microbreweries; (9) wineries and distilleries; (10) inns; and (11) licensed facilities or premises of a beverage alcohol producer where the public may taste, sample, or purchase products.

Funding Calculations

The SBA may approve up to $5 million per location, not to exceed a total of $10 million per applicant and any affiliated businesses. The minimum award is $1,000.  The SBA has provided three separate calculations to determine an applicant’s funding amount:

CALCULATION 1:

For applicants in operation prior to or on January 1, 2019:

(2019 gross receipts) – (2020 gross receipts) – (PPP loan amounts)

CALCULATION 2:

For applicants whose business operations began partially through 2019:

[(Average 2019 monthly gross receipts) X (12 month)] – [(2020 gross receipts) – (PPP loan amounts)]

CALCULATION 3:

For applicants that began operations on or between January 1, 2020 and March 10, 2021 and have not yet opened but have incurred eligible expenses:

[(Amount spent on eligible expenses between February 15, 2020 and March 11, 2021) – (2020 gross receipts) – (2021 gross receipts through March 11, 2021) – (PPP loan amounts)

Entities who began operations partially through 2019 may elect to use either Calculation 2 or Calculation 3.  Further, for purposes of the program, gross receipts do not include:

1. Amounts received from Paycheck Protection Program (PPP) loans;
2. Amounts received from Economic Injury Disaster Loans (EIDL);
3. Advances on EIDL;
4. State and local grants; or
5. SBA Section 1112 payments.

Eligible Use of Funds

Recipients are not required to repay the funding, as long as funds are spent on eligible uses by no later than March 11, 2023.  RRF funds may be used for specific expenses including:

1. Business payroll costs (including sick leave);
2. Payments on any business mortgage obligation;
3. Business rent payments (not including prepayments of rent);
4. Business debt service (both principal and interest, but not including any prepayment of principal or interest);
5. Business utility payments;
6. Business maintenance expenses;
7. Construction of outdoor seating;
8. Business supplies;
9. Business food and beverage expenses;
10. Covered supplier costs;
11. Business operating expenses.

Conclusion

The SBA will announce in the near future a start date to start accepting applications once the website they will be using has been tested.  Until then, prospective applicants are encouraged to visit the SBA website for additional information and begin assembling all necessary data and documentation requirements for the application.