The Restaurant Revitalization Fund—a program designed to provide emergency assistance for the hard-hit pandemic-stricken restaurant and bar industries—appears to be underfunded. The 28.6 billion package provides restaurants with up to $5 million per physical location and $10 million per business, with funding that is meant to equal each company’s pandemic-related lost revenue. The minimum grant amount has been established at $1,000.
Businesses do not have to repay the funds as long as they are used by March 11, 2023, for eligible purposes. If a business cannot use all funds or closes the business before this time, they must return the unused funds to the U.S. Department of Treasury.
Restaurant Dive reported on the funding shortage and the National Restaurant Association’s concern that the funds will run out in a few short weeks due to high demand. Patrick Kelley, an associate administrator for the Small Business Association’s Office of Capital Access, stated that the program did not have enough funds to provide money to all eligible applicants.
The Restaurant Revitalization Fund will start taking applications for grants on May 3 at 12 p.m. EST. Registration began on April 30 at 9 a.m. EST. Operators can apply through SBA-recognized Point of Sale (POS) systems, via an online application portal: https://restaurants.sba.gov, or by calling 844-279-8898.
Recognized POS systems that provide application submission include Square and Toast. Aloha, Clover, Oracle, Upserve, and Heartland provide supporting documentation.
Kelley and others recommend that operators apply right away. If it’s clear that there is a cash shortage, Congress may consider funding for a second round. Restaurants, bars, food trucks, and some other businesses within certain restrictions such as inns, breweries, distilleries, and caterers, can apply if they experienced pandemic-related revenue loss. The online application portal will remain in effect until the funds are depleted.
The Priority Period
During the first 21 days, the SBA will only process and fund businesses that fall into the priority group. The priority group includes small businesses owned and controlled by women, veterans, or those who are socially or economically disadvantaged. Eligibility requirements include at least 51% ownership and that the business is managed and operated by at least one member of the associated priority group.
Despite the priority funding, businesses are encouraged to submit applications as soon as the portal opens. After the first 21 days, applicants will be funded in the order they were received and approved by the SBA.
Some funds have been set aside for applicants whose gross receipts fall within a certain range. Five billion was set aside for those whose 2019 receipts were not more than $500,000, and four billion was set aside for those who brought in $500,001-$1,500,000. Additionally, $500 million was set aside for businesses with gross receipts up to $50,000.
The Amount Operators Will Receive
For those businesses that have been operating since 2018 or prior, the funding amount can be determined by subtracting 2020 gross receipts from 2019 gross receipts, minus any PPP loans received. If a business returned a PPP loan during the Safe Harbor period, it is not deducted.
How Can Funds Be Used
Funds can be used for most business costs, including payroll, rent, utilities, supplies, maintenance, other operating costs, and construction of outdoor seating.
Facts About the Restaurant Revitalization Grants
The National Restaurant Association published a frequently asked questions report regarding the revitalization grants. The following represent a few of the key points to consider.
Businesses can be disqualified from receiving restaurant revitalization grants. A few scenarios that may prompt ineligibility include the following:
- If an operator or entity owns more than 20 locations.
- If they applied for or are receiving a Shuttered Venues Operations Grant.
- A publicly traded corporation.
- The business is permanently closed or filed for bankruptcy and does not have an approved reorganization plan.
Documents required for the application process include the application form, IRS Form 4506-T, and gross receipts documentation. A business may prove their amount in gross receipts through their tax returns, bank statements, POS report, or financial statements.
The SBA is the only administration involved in funding these grants. Funds will be disbursed into the applicant’s commercial business account.
The IRS will not consider these funds as federal taxable income. While most states will conform with the federal tax code, each state may treat these funds differently, making it important for businesses to check their individual state.