The Small Business Administration (SBA) announced it would be opening the application portal for the Restaurant Revitalization Fund (RRF) grant program on Monday, May 3 at Noon Eastern Time. With this announcement, we wanted to provide an update on our previous articles (available here and here).
The RRF application can be completed through the SBA’s web portal here (registrations will open on April 30 at 9:00 a.m. Eastern Time), by telephone with the SBA at (844) 279-8898, or through one of SBA’s recently announced Point of Sale (POS) vendor partners, Square, Toast, Clover, and NCR (Aloha). The POS vendor partners will have their own application portals, which will integrate POS data. If you elect to apply by telephone, note this will delay your application, because there is follow-up documentation that must be sent by mail.
With its announcement, the SBA released a Program Guide and Sample Application. Reviewing these documents will be extremely useful for preparing and completing the RRF application. The Sample Application will enable applicants to gather all necessary documentation and complete the required calculations in advance of the application going live on Monday. You should anticipate gathering the following documents:
- IRS Form 4506-T, completed and signed by the applicant for the verification of tax information. Completion of this form digitally on the SBA platform will satisfy this requirement.
- Gross Receipts Documentation. Any of the following documents demonstrating gross receipts are acceptable:
- 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.
For applicants who are brewpubs, tasting rooms, taprooms, breweries, wineries, distilleries, bakeries, or inns, additional information is required to prove that at least 33% of your 2019 gross receipts came from on-site sales.
The Program Guide also contains some helpful clarifications and definitions by the SBA, as well as some new set-aside requirements for portions of the RRF. Grant funds may be spent until March 11, 2023, and can pay for any expense paid or incurred between Feb. 15, 2020, and March 11, 2023. Any unused funds after March 11, 2023, must be returned to the SBA, as well as unused funds by businesses that are no longer operational.
First, the SBA clearly defines what the grant funds may be used for, including:
- Payroll costs (including sick leave).
- Payments on any business mortgage obligation (note: unlike the PPP funds, this may be used to pay both principal and interest, but not pre-payment of long-term debt).
- Business debt service (both principal and interest).
- Maintenance expenses.
- Construction of outdoor seating.
- Supplies (including protective equipment and cleaning materials).
- Food and beverage expenses (including raw materials).
- Covered supplier costs.
- Operating expenses.
Also unlike the PPP, there is NO requirement that any set percentage be spent on payroll. Note, however, that expenses may not be prepaid during the covered period outside of the normal course of business.
Second, the SBA clarifies how it will prioritize awarding funds. Applicants who meet the SBA definitions of woman-owned, veteran-owned, or socially and economically disadvantaged individual-owned small businesses will have priority for the first 21 days of the application period. If you do not fall into one of these categories, this does not mean you cannot apply during this 21-day period, only that your application will not be processed until that period expires.
Finally, in addition to the $5 billion set aside for businesses with 2019 gross receipts of less than $500,000, the SBA created two new set-aside funds. First, an additional $4 billion is set aside for applicants with 2019 gross receipts of between $500,001 and $1.5 million. Second, an additional $500 million is set aside for applicants with 2019 gross receipts of equal to or less than $50,000. These two funds were created to ensure smaller businesses have access to the grant program.
Funds are expected to go quickly, so businesses wanting to take advantage of the RRF program should be prepared to register with the SBA beginning this Friday, April 30, and file an application by the go-live date of Monday, May 3. If you need assistance in preparing your application, please contact a member of Taft’s SBA Task Force or Food & Beverage industry group.
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