In our blog post on the small business support included in the American Rescue Plan, it was clear that the Restaurant Revitalization Fund (RRF) will be a key opportunity for many of our hardest-hit businesses to recover. It is not yet known when applications for the RRF will become available, with the SBA stating that it will take “weeks, not months.” While full details of this program are not yet available, this blog post will dive deeper into what we know right now about the Restaurant Revitalization Fund, how it can be used, and how to prepare to take advantage of it. Click here to skip right to the section on how to prepare to apply.
What is the Restaurant Revitalization Fund?
As part of the American Rescue Plan, signed into law on March 11, 2021, Congress recognized the great burden placed on restaurants, bars, and other similar places of business with the creation of the Restaurant Revitalization Fund (RRF). This established a $28.6 billion fund that restaurants can use to cover up to all of their pandemic-related revenue losses. The amount is determined by subtracting 2020 revenue from 2019 revenue and providing a grant for the difference, minus any PPP loans received. For example, a restaurant that made $400,000 less in revenue in 2020 compared to 2019 and also received $100,000 in PPP loans would be eligible for a grant of $300,000. Separate calculations are used to cover businesses that opened in 2019, 2020, or haven’t opened yet. These grants are not taxable and expenses covered by them can still be deducted as normal. Note: The RRF does not contain enough to cover all eligible restaurants without additional funding from Congress. As such, businesses eligible for a first or second draw PPP loan are urged to continue to take advantage of that despite the fact that it reduces the amount of the RRF grant.
Who is eligible to receive the Restaurant Revitalization Fund?
The Restaurant Revitalization Fund was designed to cover the majority of businesses focused on food and beverage sales and not covered by the existing Shuttered Venue Operator (SVO) program. Officially, this includes “a restaurant, food stand, food truck, food cart, caterer, saloon, inn, tavern, bar, lounge, brewpub, tasting room, taproom, licensed facility or premise of a beverage alcohol producer where the public may taste, sample, or purchase products, or other similar place of business in which the public or patrons assemble for the primary purpose of being served food or drink.”
Excluded from eligibility are any entities owning more than 20 locations, publicly traded entities, and any business that has an application for the SVO program.
Of the $28.6 billion, $5 billion is reserved for businesses with less than $500,000 in annual revenue. For the first 21 days after applications open, the SBA will only process applications from small business owned by women, veterans, and “socially and economically disadvantaged small business concerns” (which include most minority-owned businesses as well as other businesses where the owner has less than $750,000 in net worth and can prove that they are disadvantaged).
How are Grant Amounts Calculated?
If a business was open for all of 2019, the grant award is equal to 2019 revenue minus 2020 revenue minus PPP loans received as described above. Grant awards are capped at $5 million for any single restaurant and $10 million for any entity with multiple restaurants.
If a business was not open for all of 2019, the grant award is equal to the average monthly revenue in 2019 multiplied by 12 minus the average monthly revenue in 2020 multiplied by 12 minus PPP loans received.*
If a business opened in 2020, the grant award covers any payroll expenses to the extent that they are greater than revenues received.*
If a business has not yet opened, but has already incurred payroll costs as of March 11, the grant award will cover those payroll costs already incurred.*
*All calculations marked with an asterisk can be updated with a new calculation created by the SBA. They also maintain the grant award caps of $5 million for any single restaurant and $10 million for any entity with multiple restaurants.
How can Grant Funds be spent?
Grant funds can be utilized to cover any eligible expenses already incurred since February 15, 2020 and extending to future eligible expenses until the end of 2021. Virtually all day-to-day operating costs are included as eligible expenses under this program including payroll, regular principal and interest payments on a mortgage, rent payments, utilities, maintenance costs (including the non day-to-day expense of any construction to allow outdoor seating), supplies, food and beverage costs, covered supplier costs, operational expenses, sick leave, and other expenses that are necessary to maintain operations.
While PPP funds reduce grant eligibility, other programs such as the Employee Retention Tax Credit do not. Still, any expense can only be utilized once, so if all payroll costs are covered between the PPP and ERTC, they will not be elligible expenses under this program.
How to Prepare to Apply for the Restaurant Revitalization Fund
While there is no set date when the application for the Restaurant Revitalization Fund will be made available, the SBA has stated that it will take “weeks, not months”. With that in mind there are a couple of steps restaurants should take now to make sure they can access these funds when they are available. A greater description of these steps can be found on slides 17 – 24 of this presentation put together by the American Restaurant Association. Businesses should begin by registering for or determining their DUNS number, register for a SAM.gov account, and prepare to submit a notarized letter to the Federal Service Desk.
Getting a DUNS number
The first step for businesses seeking to apply for this program is to determine or register for a DUNS number. A DUNS number is a unique identifier assigned to a business by Dun & Bradstreet (D&B) that is used by the Federal Government and other entities to organize their interactions with businesses. If a business already has a DUNS number, they can look up their number here. If a business needs to apply for a DUNS number, they can apply for it here. This process can take up to two days.
Tip: If your business is looking to apply for a DUNS number solely for the purpose of applying to the RRF, it is advised to choose “I’m a U.S. Government Contractor or Grantee” as the primary reason for applying.
Registering for a SAM.gov account
The System for Award Management (SAM), is the website used by the Federal Government to coordinate the suppliers that they work with. It is expected that an account on SAM.gov will be required to apply for the RRF.
In order to register for a SAM.gov account, an individual must first create an account at login.gov. Once that account is created, they can login at SAM.gov and register their business entity. A business must have a DUNS number prior to registering at SAM.gov.
Tip: If your business is registering for an account solely to apply for the RRF, choose “I only want to apply for federal assistance opportunities like grants, loans, and other financial assistance programs.” in response to the question “Why are you registering this entity to do business with the Federal Government?”
Finalize SAM registration with a notarized letter
SAM accounts must now be finalized with a notarized letter that is submitted to the Federal Service Desk. Businesses can use either of the two templates below. If a business does not have letterhead, they enter the entity’s legal business name & address on the top of each letter before printing. Once the letter has been signed in the presence of a notary (contact Greater Mankato Growth at 507-385-6640 if you need assistance locating a notary), the letter can be scanned and submitted to the Federal Service Desk.
Template for single entity (download): https://sam.gov/sam/transcript/fsd/notarized_templates/SAM_Entity_Administrator_Letter_Template1_Single_Entity.docx
Template for multiple entities (download): https://sam.gov/sam/transcript/fsd/notarized_templates/SAM_Entity_Administrator_Letter_Template2_Multiple_Domestic_Entities.docx
Be on the lookout for updates to the RRF program and application process. The steps outlined above are expectations, but may change. If your business needs assistance with this registration or with the application, Greater Mankato Growth recommends seeking free assistance from the Small Business Development Center. Businesses seeking assistance can apply for assistance at myminnesotabusiness.com.