Greater Mankato Growth participated in the U.S. Small Business Administration webinar on April 28th to learn more about the Restaurant Revitalization Fund and its application process. In short, the Restaurant Revitalization Fund will allow restaurants, bars, and other similar entities (a full list of eligible entities can be found here) to receive a grant that covers all lost revenue in 2020 compared to 2019. Please note special rules apply to entities that opened after January 1, 2019 or that still haven’t opened. This blog post will first share how to apply and will then share additional details on the specifics regarding the program.
The SBA will open up the opportunity to create an account at restaurants.sba.gov this Friday at 8 a.m. Central Time by choosing “Register to start your application.” Applicants are strongly encouraged by the SBA to create their accounts on Friday and not to wait until Monday. The opportunity to submit an application will open on Monday, May 3, at 11 a.m. Central Time. The SBA holds that the website is designed to support expected traffic with all restaurants submitting applications at that time. Applicants are strongly encouraged by the SBA to submit their application at the first possible minute. Additionally, applicants are encouraged to review all documentation at the SBA’s webpage on the fund. Please note that a recording of the SBA webinar can be viewed at the end of the “How to Apply” section of this blog.
Edit: 4/29/2021 The SBA’s Restaurant Program Knowledge Database serves as a growing list of FAQs that may answer questions that you have specific to your business.
How to Apply
The first step applicants should take is registering (creating a login account) at restaurants.sba.gov on Friday at 8 a.m. Applicants that plan to submit their application via the point of sale (POS) providers Square or Toast do not need to register. Entities utilizing Clover or Aloha should still register. The only requirement when registering on Friday is that applicants must have a mobile phone as a text will be utilized to verify the login.
It’s key for applicants to to begin preparations ahead of the when the application process opens Monday May 3, at 11 a.m. Applicants can prepare by following instructions below, reading the program guide, having all documentation prepared in labeled PDFs, and completing the sample application. Applicants that have conducted this pre-work are expected to complete the application in roughly 25 minutes. The SBA encourages that restaurants that seek to apply should be prepared to submit their application in the first possible minute after the portal opens. The website currently handles more traffic than is expected on Monday and is not expected to crash.
In addition to applying at restaurants.sba.gov, applicants that utilize Toast or Square can register through their point of sale vendor. Applicants utilizing Clover or Alpha should work with their POS providers to determine which support they can receive with their applications. Applicants can also apply by calling 844-279-8898. This is not recommended as processing times will be longer as the application will need to be mailed to your place of business and notarized.
Documents to Prepare
- Gross Receipts Documentation: Any of the following documents demonstrating gross receipts and, if applicable, eligible expenses
- 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
Special documentation is required for bakeries, breweries, wineries, distilleries.
- Documents evidencing that onsite sales to the public comprise at least 33.00% of gross receipts for 2019, which may include Tax and Trade Bureau (TTB) Forms 5130.9 or TTB. For businesses who opened in 2020, the Applicant’s original business model should have contemplated at least 33.00% of gross receipts in onsite sales to the public.
Special documentation is required for inns planning to apply.
- Documents evidencing that onsite sales of food and beverage to the public comprise at least 33.00% of gross receipts for 2019. For businesses who opened in 2020, the Applicant’s original business model should have contemplated at least 33.00% of gross receipts in onsite sales to the public.
Important notes when applying
- Applicants can apply with an EIN, Social Security Number, or an unexpired ITIN. They must apply with the same number as they used when applying for PPP loans.
- All documentation must be included in the application. Applications without all documentation will be rejected.
Important notes on priority applicants
For the first 21 days, the SBA will only process applications from women-owned, veteran-owned, or economically or socially disadvantaged individual-owned businesses. All applicants are still encouraged to apply immediately, even if they are not included in these groups. Those that are not in the priority groups will be processed beginning on day 22 in the order that they were received.
Applicants that are socially disadvantaged must self-certify that they are (or that at least 51% of the business is owned by) women, veterans, or economically or socially disadvantaged individuals.
According to the SBA webinar, socially disadvantaged groups include:
- Black Americans
- Hispanic Americans
- Native Americans (including Alaska Natives and Native Hawaiians)
- Asian Pacific Americans or Subcontinent Asian Americans
Applicants that are economically disadvantaged must self-certify that due to some other social disadvantage (the SBA used LGBTQ as an example) their “ability to compete in the free enterprise system has been impaired due to diminished capital and credit opportunities as compared to others in the same business area who are not socially disadvantaged”
- Examples of this include if it was more difficult to find loans or to find a place to rent due to this social disadvantage
Any entity that reorganizes in order to qualify for priority application will be disqualified from the program.
The following forms of revenue should not be included in your 2020 gross receipts
- PPP Loans (first or second draw) – these will be included automatically based on the EIN, SSN, or ITIN provided
- SBA Section 1112 payments
- SBA EIDL relief loans or advances
- Any state or local business grants received
- FRRP Appropriations
Resources to support applications
While not required, applicants are strongly encouraged by the SBA to work with a CPA to prepare their materials. The following additional resources are provided by the SBA.
- Call Center Hotline 844-279-8898 is available from 7am-7pm Monday through Friday US Central Time. Support is offered in 10 languages
- The Minneapolis SBA District Office
- The local Small Business Development Center
Due to webinar capacity restrictions, some Greater Mankato Growth members may not have been able to attend. A recording of the webinar is provided below. Key information on the program and how to apply begins 11 minutes into this recording.
Details About the Restaurant Revitalization Fund
The Restaurant Revitalization Fund was created to address the substantial impact faced by restaurants, bars, food trucks, catering businesses, and other businesses that make the majority of their revenue from selling food or beverages for onsite consumption. A full list of eligible entities can be found here. It does this by providing grant funding that is not taxed at the federal level to restaurants based on three calculations depending on when restaurants opened.
The $28.6 billion program has a maximum funding amount of $5 million per restaurant and $10 million per restaurant group. Organizations with more than 20 locations, publicly traded organizations, municipal owned organizations, non-profits, organizations that have received SVOG grants, permanently closed organizations, and organizations filing for bankruptcy are ineligible.
Funds received via this program can be applied retroactively to any eligible expenses beginning on February 15, 2020 and can be applied to any future eligible expenses until March 11, 2023. Eligible expenses include virtually all regular operating expenses, the addition of outdoor seating (but not indoor seating), and payments on mortgages or other debts (but not prepayments). Eligible and ineligible expenses are discussed in greater detail around minute 17 of the video above.
Under the following scenarios, unused funds will be required to be returned to the Federal Government:
- A business has not utilized all funds by March 11, 2023.
- A business closes before utilizing all funds.
- A business sells before utilizing all funds (in this scenario, unused funds will be deducted from the sale price and remitted to the Federal Government).
Funding Set Aside for Small Businesses
- $5 billion is set aside for Applicants with 2019 gross receipts of not more than $500,000.
- An additional $4 billion is set aside for Applicants with 2019 gross receipts from $500,001 to
- An additional $500 million is set aside for Applicants with 2019 gross receipts of not more
How Funding is Calculated
- Calculation 1: Applies to businesses that opened on or before January 1, 2019
- 2019 gross receipts minus 2020 receipts minus PPP loans received.
- Calculation 2: Applies to businesses that opened in 2019
- Average 2019 monthly gross receipts multiplied by 12 minus 2020 gross receipts minus PPP loans received.
- Calculation 3: Applies to businesses that opened between January 1, 2020 and March 10, 2021 and had already incurred eligible expenses or businesses that have not yet opened but have already incurred eligible expenses
- Add up eligible expenses between February 15, 2020 and March 11, 2021. Subtract 2020 gross receipts and 2021 gross receipts through March 11, 2021. Subtract PPP loans received
- Businesses that have received no revenue but are opening can receive a grant that covers eligible expenses incurred between February 15, 2020 and March 11, 2021.
Please note the section above for revenue that should not be included in 2020 gross receipts.
Businesses seeking support with their applications can refer to the hotline, the SBA District Office, or the local SBDC. The SBA’s webpage on the fund can be found here: Restaurant Revitalization Fund (sba.gov).
Businesses with additional questions on the Restaurant Revitalization Fund can be addressed to GMG staff by contacting Ryan Vesey at [email protected].