The Small Business Administration (SBA) has released guidance on the Restaurant Revitalization Fund. This fund provides needed resources to some of the hardest-hit businesses of the COVID-19 pandemic. As part of the released guidance, a sample application was released, as well as the three ways in which applicants can apply. There is a priority group that will be able to apply for the first 21 days before the program is open to all eligible applicants. No date has been released as to when applications will start to be accepted. You can find additional information on the program and how to apply below.

Application Portal: here.
SBA Restaurant Revitalization Fund Website: here.
SBA Restaurant Revitalization Fund Application: here.
SBA Restaurant Revitalization Funding Program Guide: here.

Eligibility

For businesses to be eligible they must not have permanently closed where the public or patrons assemble for the primary purpose of being served food or drink including:

  • Restaurants
  • Food stands, food trucks, food carts
  • Caterers
  • 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 being served food or drink
  • Snack and nonalcoholic beverage bars
  • *Bakeries
  • *Brewpubs, tasting rooms, taprooms
  • *Breweries and/or microbreweries
  • *Wineries and distilleries
  • **Inns

*Bakeries, brewpubs, tasting rooms, taprooms, breweries, microbreweries, wineries and distilleries: In order to be eligible, these businesses must provide documentation with their application that on-site sales to the public comprised at least 33% of gross receipts in 2019. For businesses who opened in 2020 or that have not yet opened, the Applicant’s original business model should have contemplated at least 33% of gross receipts in on-site sales to the public.

**Inns: To be eligible, these businesses must provide documentation with their application that on-site sales of food and beverage to the public comprised at least 33% of gross receipts in 2019. For businesses that opened in 2020 or that have not yet opened, the Applicant’s original business model should have contemplated at least 33% of gross receipts in on-site food and beverage sales to the public.

Note: To satisfy the statutory requirement for “place of business in which the public or patrons assemble for the primary purpose of being served food or drink,” an eligible entity must have at least 33% in 2019 on-site sales to the public. The original business model of eligible entities that opened in 2020 or that have not yet opened should have contemplated at least 33% of gross receipts in on-site sales to the public. Those entities without additional documentation requirements, such as restaurants and bars, are presumed to have on-site sales to the public comprising at least 33% of gross receipts in 2019. All applicants must attest in the application to the following “The Applicant is eligible to receive funding under the rules in effect at the time this application is submitted.”

Eligible entities include any of the above entities located in an airport terminal or that operate independently (i.e. has its own tax identification number) inside another business (e.g. a restaurant that operates independently inside a hotel or conference center) or that are a Tribally-owned concern.

Calculation of Funding Amount

Funding can be provided for up to $5,000,000 per location (not to exceed $10,000,000 total for the applicant and any affiliated businesses). The minimum funding amount will be $1,000 for any grant.

There are three calculations that can be used based on when the business was in operation. In operation means the day the entity started making sales. This does not mean the day the Applicant registered with the Secretary of State to establish the Applicant’s legal entity (for example: if the Applicant formed the LLC on August 15, 2015 but didn’t make the first sale to a customer until January 1, 2016, the Applicant’s in operation date is January 1, 2016). For entities who began operations partially through 2019, can at their own discretion use either calculation 2 or calculation 3.

Corrections can be made prior to receiving funding and will need to be done through the application portal and could take up to 14 days to be reviewed.

For the purposes of the calculation under the SBA the term gross receipts is defined as the following:

Gross receipts generally are all revenue in whatever form received or accrued (in accordance with the entity’s accounting method, i.e., accrual or cash) from whatever source, including from the sales of products or services, interest, dividends, rents, royalties, fees, or commissions, reduced by returns and allowances but excluding net capital gains and losses. These terms carry the definitions used and reported on IRS tax return forms.

The amounts required to calculate gross receipts varies by the entity tax return type:

  • For self-employed individuals (IRS Form 1040 Schedule C): line 3 (If you file multiple Schedule C forms on the same Form 1040, you must sum across all of them)
  • For partnerships (IRS Form 1065): line 1c
  • For S-Corporations (IRS Form 1120-S): line 1c
  • For C-Corporations (IRS Form 1120): line 1c
  • LLCs: Use one of the above
  • B Corporations: Use line 1c from either IRS Form 1120 or 1120S

If an Applicant’s gross revenues include any of the following, the amount associated with the following should be subtracted from gross receipts:

  • Paycheck Protection Program (PPP) loan (First Draw PPP Loan or Second Draw PPP Loan);
  • SBA Section 1112 payments;
  • SBA Economic Injury Disaster Loan (EIDL) loan, EIDL Advance, Targeted EIDL Advance;
  • Any state and local small business grants (via CARES Act or otherwise);
  • Taxes collected for and remitted to a taxing authority if included in gross or total income, such as sales or other taxes collected from customers (this does not include taxes levied on the concern or its employees);
  • Proceeds from transactions between a concern and its domestic or foreign affiliates; and
  • Amounts collected for another by a travel agent, real estate agent, advertising agent, conference management service provider, freight forwarder or customs broker.

All other items, such as subcontractor costs, reimbursements for purchases a contractor makes at a customer’s request, investment income, and employee-based costs such as payroll taxes, may not be excluded from gross receipts.

Calculation 1 (Table 1 from Application): Applicants that were in operation (making sales) prior to or on January 1, 2019:

  • Step 1: Begin with gross receipts as reported on the eligible entity’s 2019 Federal tax return.
  • Step 2: Subtract 2020 and 2021 (through March 11, 2021) gross receipts as reported or to be reported on the eligible entity’s Federal tax return or, if applying through a designated SBA point-of-sale restaurant partner, the gross receipts that are recorded with the point-of-sale partner.
  • Step 3: Subtract the aggregate original disbursement amount(s) of any PPP loan (First Draw PPP Loan and Second Draw PPP Loan) received, regardless of whether received in 2020 or 2021. Do not include any amount that you repaid on or before May 18, 2020, in accordance with PPP safe harbor rules.
  • Step 4: If the total is more than $5 million per physical location, reduce the amount to $5 million per physical location. Your funding amount, together with your affiliates, may not exceed $10 million. If the total is less than $1,000, you are not eligible.

Applicants that began operations (making sales) partially through 2019

For those entities who began operations partially through 2019, you may elect (at your own discretion) to use either calculation 2 or calculation 3 from the funding calculations below.

Calculation 2 (Table 2 from Application):

  • Step 1: Calculate your annualized 2019 gross receipts:
  • Step 1(a): Begin with gross receipts as reported on the eligible entity’s 2019 Federal tax return.
  • Step 1(b): Calculate your 2019 average monthly gross receipts. For example, if you opened your doors on October 15, 2019 (were in operation for 2.5 months) and your total 2019 gross receipts were $25,000: Divide $25,000 by 2.5 for a 2019 average monthly gross receipts calculation of $10,000.
  • Step 1(c): Multiply your 2019 average monthly gross receipts (the amount from Step 1(b)) by 12. For example, if your 2019 average monthly gross receipts was $10,000, multiply $10,000 by 12 to result in $120,000.
  • Step 2: Subtract 2020 gross receipts as reported or to be reported on the eligible entity’s 2020 Federal tax return or, if applying through a designated SBA point-of-sale restaurant partner, the gross receipts that are recorded with the point-of-sale partner.
  • Step 3: Subtract the aggregate original disbursement amount(s) of any Paycheck Protection Program (PPP) loan (First Draw PPP Loan or Second Draw PPP Loan) received, regardless of whether received in 2020 or 2021. Do not include any amount that you repaid on or before May 18, 2020 in accordance with PPP safe harbor rules.
  • Step 4: If the total is more than $5 million per physical location, reduce the amount to $5 million per physical location. Your funding amount, together with your affiliates, may not exceed $10 million. If the total is less than $1,000, you are not eligible.

Calculation 3 (Table 3 from Application): Applicants that began operations (making sales) on or between January 1, 2020 and March 10, 2021; and Applicants that have not yet opened for sales but as of March 11, 2021, have incurred eligible expenses:

  • Step 1: Start with the total amount you spent on eligible expenses incurred on or between February 15, 2020 and March 11, 2021. Eligible expenses have the same definition as “Eligible Uses of Funds,” below.
  • Step 2: Subtract 2020 gross receipts as reported or to be reported on the eligible entity’s 2020 Federal tax return or, if applying through a designated SBA point-of-sale restaurant partner, the gross receipts that are recorded with the point-of-sale partner.
  • Step 3: Subtract the aggregate original disbursement amount(s) of any Paycheck Protection Program (PPP) loan (First Draw PPP Loan or Second Draw PPP Loan) received, regardless of whether received in 2020 or 2021. Do not include any amount that you repaid on or before May 18, 2020 in accordance with PPP safe harbor rules.
  • Step 4: If the total is more than $5 million per physical location, reduce the amount to $5 million per physical location. Your funding amount, together with your affiliates, may not exceed $10 million. If the total is less than $1,000, you are not eligible.

Eligible Uses of Funds

Funds from the RRF can be used against the eligible expenses during the covered period. The covered period begins on February 15, 2020 and ends on March 11, 2023. If the business permanently closes, the covered period will end when the business permanently closes or on March 11, 2023, whichever occurs sooner. Recipients that are unable to use all of the funds received on eligible expenses by the end of the covered period must return any unused funds to Treasury.

The following expenses are considered eligible expenses for this funding:

  1. Business payroll costs, including sick leave and costs related to the continuation of group health care, life, disability, vision, or dental benefits during periods of paid sick, medical, or family leave, and group health care, life, disability, vision, or dental insurance premiums.
  2. Payments on any business mortgage obligation (both principal and interest; note: this does not include any prepayment of principal on a mortgage obligation);
  3. Business rent payments, including rent under a lease agreement (note: this does not include any prepayment of rent).
  4. Business debt service (both principal and interest; note: this does not include any prepayment of principal or interest).
  5. Business utility payments for the distribution of electricity, gas, water, telephone, or internet access, or any other utility that is used in the ordinary course of business for which service began before March 11, 2021.
  6. Business maintenance expenses including maintenance on walls, floors, deck surfaces, furniture, fixtures, and equipment.
  7. Construction of outdoor seating.
  8. Business supplies, including protective equipment and cleaning materials.
  9. Business food and beverage expenses, including raw materials for beer, wine, or spirits.
  10. Covered supplier costs, which is an expenditure made by the eligible entity to a supplier of goods for the supply of goods that:
    1. Are essential to the operations of the entity at the time at which the expenditure is made; and
    2. Is made pursuant to a contract, order, or purchase order in effect at any time before the receipt of Restaurant Revitalization funds; or
    3. With respect to perishable goods, a contract, order, or purchase order in effect before or at any time during the covered period.
  1. Business operating expenses, which is defined as business expenses incurred through normal business operations that are necessary and mandatory for the business (e.g. rent, equipment, supplies, inventory, accounting, training, legal, marketing, insurance, licenses, fees). Business operating expenses do not include expenses that occur outside of a company’s day-to-day activities.

Note: Past-due expenses are eligible if they were incurred beginning on February 15, 2020 and ending on March 11, 2023.

Not later than December 31, 2021, all Applicants are required to report through the application portal how much of their award has been used against each eligible use category. If the Applicant fully expends their funds prior to December 31, 2021, they will be asked to certify in the application portal that proceeds have been used on eligible expenses. All Applicants that do not fully expend award funds prior to December 31, 2021 will be required to complete annual reporting submissions until they fully expend the award funding or the period of performance expires. SBA reserves the right to request supplemental documentation needed to validate the certification.

How to Apply

There are three ways to apply for the Restaurant Revitalization fund.

  1. Through a recognized SBA Restaurant Partner
  2. Through SBA directly at restaurants.sba.gov
  3. Telephonically at (844) 279-8898

Apply through SBA Restaurant Partners

The SBA developed partnerships with multiple recognized technology companies that provide software, hardware & payments services to the restaurant industry to help ensure wide and equitable distribution of relief. These partners are referred to as SBA’s Restaurant Partners or SBA’s Point-of-Sale (POS) Restaurant Partners.

If you currently use one of the SBA’s Restaurant Partners, you can apply for funding through their website or secure portal. These partners developed capabilities to make it easier for applicants to calculate, validate, and submit applications to the SBA. The SBA encourages applicants who are using our partners to apply through their customized process – this will save time in preparing and processing the application.

Each Restaurant Partner may have unique processes or supporting materials Applicants can use. The SBA is actively working to add additional partnerships in the coming weeks. You can monitor sba.gov/restaurants for additional updates from the SBA on official partners.

Apply Directly through SBA

  1. Gather documentation outlined in this document.
  2. If you have access to the internet and will not apply through one of SBA’s Restaurant Partners, visit http://restaurants.sba.gov/ to access the application platform.
  3. Create an account.
  4. Complete the application questionnaire and attestations.
  5. Upload necessary documentation.
  6. Upon application completion, a DocuSign package will be sent to the email entered in the application portal.
  7. Execute DocuSign package immediately in order to trigger SBA review process.
  8. SBA will begin review of your application. Review will take approximately 14 days to complete provided complete and validated documentation. Applicants may check the status of their application on the application portal.
  9. Application decision information or request for further documentation will be sent to the email associated with the Applicant account.
  10. If approved, funds will automatically be deposited to the bank account entered into the application.

Apply Telephonically Direct through SBA

  1. Apply Telephonically Directly through SBA
  2. Gather documentation outlined in this document.
  3. Call (844) 279-8898
  4. Complete the application questionnaire and attestations with support agent.
  5. Completed application and signature documents mailed to Applicant.
  6. Applicant must mail fully executed and notarized application back to SBA (return address instructions included in mailed application).
  7. SBA will begin review of your application. Review will take approximately 14 days to complete provided complete and validated documentation.
  8. Application decision information or request for further documentation will be sent to the email associated with the Applicant account or mailed if no email available.
  9. If approved, funds will automatically be deposited to the bank account entered into the application.

When to Apply

All applicants will be able to apply when the application process opens but for the first 21 days the processing and funding of application of those eligible in the priority groups will be completed first. After the 21st day, all eligible entities applications will be processed and funded.

SBA will consider an applicant to be eligible for priority in awarding funds if the Applicant is a small business that is at least 51 percent owned by one or more individuals who are women, veterans, or socially and economically disadvantaged and if the management and daily business operations of the applicant are controlled by one or more women, veterans, or socially and economically disadvantaged individual.

For example, an Applicant has five owners who each own 20 percent. Two owners are veterans, and one owner is a socially and economically disadvantaged individual. SBA will consider this Applicant to meet the requirement that at least 51 percent of the applicant is owned by a priority group.

If an individual meets the requirements of more than one priority group category, that individual is only counted once.

For example, an Applicant has five owners who each own 20 percent. One of the owners is a woman veteran who is a socially and economically disadvantaged individual; however, none of the remaining four owners are a woman, veteran, or socially and economically disadvantaged individual. This Applicant is not eligible to file an application as a priority group applicant. However, this Applicant may still apply as a non-priority Applicant.

Set-Asides

To ensure that the smallest businesses and those in underserved communities receive funding awards, SBA has set aside funds that are available only for certain applicants.

  1. $5 billion is set aside for Applicants with 2019 gross receipts of not more than $500,000.
  2. An additional $4 billion is set aside for Applicants with 2019 gross receipts from $500,001 to $1,500,000.
  3. An additional $500 million is set aside for Applicants with 2019 gross receipts of not more than $50,000.

Receiving Funds

As part of the Restaurant Revitalization Fund, the SBA will directly disburse proceeds to the applicant’s operating account.

  • For your protection, the SBA requires disbursement to be placed into the Applicant’s commercial business account. Using the SBA automatic linking service will expedite this process.
  • In cases of sole proprietors operating without a commercial account, the SBA will require supporting documentation to demonstrate this account is utilized for restaurant operations, and it is owned by the sole proprietor. SBA will not allow funding accounts with limited (less than 3 months) history or unrelated ownership to the Applicant. The SBA platform will reinforce these controls as part of your application process.
  • Failure to align these payment rules will delay applicant funding.

Documentation Needed

Applicants that were in operation prior to or on January 1, 2019, must supply at the time of application documentation of gross receipts for 2019 and 2020.

Applicants that began operations partially through 2019 and use calculation 2 must supply at the time of application documentation of gross receipts for 2019 and 2020. Applicants that began operations partially through 2019 and use calculation 3 must supply at the time of application documentation of gross receipts for 2020.

Applicants that began operations on or between January 1, 2020 and ending on March 10, 2021 and Applicants that have not yet opened as of March 11, 2021, but have incurred eligible expenses, must supply at the time of application documentation of gross receipts and eligible expenses for the length of time in operations.

(1) For all Applicants, the following documentation is required:

  • The application: SBA Form 3172, completed, initialed, and signed. Completion of this form digitally on the SBA Platform will satisfy this requirement.
  • Verification for Tax Information: IRS Form 4506-T, completed and signed by Applicant. Completion of this form digitally on the SBA Platform will satisfy this requirement.
  • Gross Receipts Documentation: Any of the following documents demonstrating gross receipts and, if applicable, eligible expenses:
    • Business tax returns (IRS Form 1120 or IRS Form 1120-S);
    • IRS Form1040 Schedule C; IRS Form 1040 Schedule F;
    • For a partnership: partnerships 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.

(2) For Applicants that are a brewpub, tasting room, taproom, brewery, winery, distillery, or bakery: In addition to the documents in (1) above, documents evidencing that onsite sales to the public comprise at least 33% of gross receipts for 2019. These may include 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.

(3) For Applicants that are an Inn: In addition to the documents in (1) above, documents evidencing that onsite sales of food and beverage to the public comprise at least 33% of gross receipts for 2019. These may include internally created revenue reports or accounting reports.