Restaurant Revitalization Grants
On the eve of the anniversary of the first shutdown, restaurants finally have the relief they have been asking for for nearly a year. This victory is a result of the hard work of some incredible folks. Nationally, Tom Colicchio of Craft Group, Andrew Rigie of the New York City Hospitality Alliance, Congressman Earl Blumenauer and most importantly, the newly founded Independent Restaurant Coalition applied absolutely relentless pressure on our elected officials to get the RESTAURANTS Act in this latest relief bill. On a state level, we can be thankful for the efforts of Mass Restaurants United, and locally, Nancy Thomas of Mezze Restaurant Group, and Mark Firth of Prairie Whale, for making sure the Berkshires was properly represented.
It’s truly a sight to behold, independent restaurants coming together and establishing a grassroots organization, and building a network that really has never existed before. It’s validation that this type of representation is absolutely necessary, and that Mass Restaurants United and the Independent Restaurant Coalition continue to exist and represent this vital industry in future.
We were promised that the Restaurant Revitalization Fund (RRF) would be “Opening in weeks, not months ” - U.S. Rep. Blumenauer, Oregon (D). Well, so much for that. Just over a full month after the passage of the American Rescue Plan Act. We can actually confirm what the application looks like. The Small Business Administration (SBA) launched the RRF page on their website over the weekend, and with it, revealed a program guide, and a sample application.
None of the information that was released was anything all that shocking. The SBA and the Independent Restaurant Coalition (IRC), had already spent the better part of the previous two weeks hosting town halls explaining how the program would work. They did provide some useful example, and a decision tree illustrating how you should apply to the program based on a few options that they have, which is nifty.
With all that being said, we’re getting closer, albeit at a much slower pace than we were hoping for. On a different, but related topic, the SBA’s Shuttered Vendor Operator Grant reopens next week, after a titanic failure in launching their portal. At this point, our primary concern, is that the RRF doesn’t suffer the same fate as the SVOG grant come application time.
So, with all of that said, let’s see what the hard work of these individuals got us...
How do you apply to the Grant?
This grant (you read that correctly), is available for all restaurants, regardless of when they opened. This is a monstrous departure from the PPP which originally was just allowing funds for businesses that had operated in 2019. This had been a particular pain point for businesses that were in the final stages of opening when the pandemic hit. This was one of the most acutely affected groups of businesses, as all of the grants that were available on the state level, also went off the criteria of the PPP.
This grant will be administered by the Small Business Administration directly, similarly to the EIDL as opposed to the PPP. This is a good thing, because they aren’t going to deviate from what the SBA requires (banks have been asking for some weird shit this time around).
This program is also specifically geared toward small, local, independent restaurants. Ruth’s Chris Steak House is not in the running for the same money you are this time, so the $28.6B (with a B people!) will probably last a little longer. You can get up to $10m if you are a larger group, but there are some interactions with the PPP to consider when looking at how much money you’ll be able to receive. See below for some of the details.
With all this said, the program looks like it's going to be insanely helpful. Sign up for our webinar, and we’ll give you the latest details on how this program works with the link below:
F.A.Q
Is my business eligible?
Food service or drinking establishments, including caterers, brewpubs, taprooms, and tasting rooms, that are not part of an affiliated group with more than 20 locations are eligible. This list is of businesses expected to become more well defined with SBA Guidance. An entity cannot be publicly traded or have a pending application under the Save our Stages program, and there are limits on the participation of private equity funds.
What costs are eligible?
Payroll and benefits (not including employee compensation exceeding $100,000/year), mortgage (no prepayment), rent (no prepayment), utilities, maintenance, construction to accommodate outdoor seating, supplies (including personal protective equipment and cleaning materials), food and beverage expenses, operational expenses, covered supplier costs as defined by the SBA under the PPP program, sick leave, and any other expenses deemed essential by the Administrator. Grants can be spent on eligible expenses from 2/15/20 through 12/31/21 and the Administrator may extend the period through two years from enactment if conditions warrant.
How much is my business eligible for
So, here’s the bad news: there’s some math involved. Fortunately, it's not too bad. It is not nearly as bad as the PPP. Essentially, you have to look at the change in revenue from 2019 in comparison to 2020, and then subtract the PPP loan proceeds. What they are trying to get to, is the net effect that COVID had on your business, less any aid you’ve already received. There are specific methods for newer businesses listed below:
Other Updates to the Program
If you haven’t heard already, the DUNS/SAM is dead. DEAD! If you applied for, and received these numbers, great! You won’t need them, but it also doesn’t hurt to have either.
You now have until January 20, 2023 to spend the grant money.
Hybrid Businesses: Are eligible for the RRF Grants, but the business must operate under the same EIN (that means one tax return), and at least 33% of total revenue in 2019 must come from F&B sales. What if you opened in 2020? Well, we’re not sure.
You will have to provide ownership information of those who have more than 20% ownership. It also looks like non-citizens can apply for this program as well, as a ITIN is an option on the draft application that the SBA submitted to the OMB. It’s not set in stone, but they made this change to the PPP, so it's pretty likely that it will be the same story with the RRF.
You can pay business debt, and forgiven debt from SBA loans doesn’t count towards revenue.
Proof of revenue is pretty flexible. You will have to complete a 4506-T, but that is a hell of a lot easier than a SAM/DUNS registration, so we’ll take it. In order to provide proof of revenue you need to provide one of the options for 2020 (and 2019 if you were in business before 2020):
Tax Returns (1120, 1120-S, 1040, 1065)
Prepared Financial Statements
POS Reports, or 1099-K from your CC Processor
Bank Statements (Not recommended)
You don't qualify if you:
Taken an SVOG Grant
State or Local Gov’t, maybe NPO’s
Permanently closed. If you are shut down temporarily and are waiting for this to blow over, you’re good!
Filed for Bankruptcy (Chp, 7 or 11, but 11, 12, 13 are conditional)
Business owned by women, veterans and socially and economically disadvantaged individuals will get priority, as long as the business ownership is made up of more than 51% of the previously listed individuals. That 51% means that jointly owned equal businesses between a husband and wife do not count. However, if the ownership is made up of a veteran, a woman, and someone that doesn’t qualify, then you’re good. Ownership needs to be 51% or MORE.
We don’t quite know who are considered “socially and economically disadvantaged” individuals yet, but we know that they have set aside $5B for businesses that have under 500k in annual revenue.
Are the grants taxable?
The income is not, but the expenses are tax deductible… federally. We don’t know how states are going to handle it.
Clarification for Businesses that opened in 2020 can use expenses from February 15, 2020 through March 11th, 2021 minus 2020 revenue. The first three months of revenue 2021 is NOT included.
When can I apply?
Who knows at this point. The SBA is dealing with a different disaster with the SVOG program, and will likely have to put out that fire, before turning their attention to the launch of this new portal. At this point, they still also need to beta test the portal, which they said will take about two weeks. So, with all that being said, we’re probably looking at a month or more before the application portal opens.