Restaurant Revitalization Fund Details Come Into Focus

The $28.6 billion program was established in March. The award grants of up to $5 million per physical location and is capped at $10 million per entity and affiliates. Eligible entities that have experienced pandemic-related revenue loss include:

• Restaurants
• Food stands, food trucks, and food carts
• Caterers
• Bars, saloons, lounges, and taverns
• Snack and nonalcoholic beverage bars
• Bakeries, brewpubs, tasting rooms, taprooms, breweries, microbreweries, wineries, and distilleries at which on-site sales to the public comprise at least 33% of the gross receipts
• Inns at which on-site sales of food and beverages to the public comprise at least 33% of gross receipts
• Licensed facilities or premises of a beverage alcohol producer where the public may taste sample, or purchase products

How to apply

To verify tax information, businesses will be required to submit IRS Form 4506-T, Request for Transcript of Tax Return, completed and signed by the applicant.

For gross receipts and eligible expenses documentation, any of the following documents may be submitted:

• Business tax returns (IRS Form 1120, U.S. Corporation Income Tax Return, or IRS Form 1120-S, U.S. Income Tax Return for an S Corporation)
• IRS Forms 1040, U.S. Individual Income Tax Return, Schedule C, Profit or Loss From Business; IRS Forms 1040, Schedule F, Profit or Loss From Farming
• For a partnership, the partnership’s IRS Form 1065, U.S. Return of Partnership Income (including Forms K-1, Partner’s Share of Income, Deductions, Credits, etc.)
• Bank statements
• Externally or internally prepared financial statements such as income statements or profit-and-loss statements
• Point-of-sale reports, including IRS Form 1099-K, Payment Card and Third Party Network Transactions

Eligible brewpubs, tasting rooms, taprooms, breweries, wineries, distilleries, and bakeries will need to submit documents showing evidence that on-site sales to the public comprised at least 33% of gross receipts for 2019. This may include Tax and Trade Bureau Forms 5130.9 or TTB. For businesses that opened in 2020, the applicant’s original business model should have contemplated at least 33% of gross receipts in on-site sales to the public.

Eligible inns will need to provide documents showing that on-site sales of food and beverage to the public comprised at least 33% of gross receipts for 2019. For businesses that opened in 2020, the applicant’s original business model should have contemplated at least 33% of gross receipts in on-site sales to the public.

During the first 21 days of the application period, the SBA will only process and fund applications where the applicant has self-certified that it meets the eligibility requirements for a small business that is at least 51% owned by women, veterans, or socially and economically disadvantaged individuals. Socially disadvantaged individuals are defined as those who have been subjected to racial or ethnic prejudice or cultural bias because of their identity as a member of a group without regard to their individual qualities.

Economically disadvantaged individuals are defined as those socially disadvantaged individuals whose ability to compete in the free enterprise system has been impaired due to diminished capital and credit opportunities compared with others in the same business area who are not socially disadvantaged.

Funding details and calculations

The program includes $5 billion set aside for applicants with 2019 gross receipts of $500,000 or less; an additional $4 billion set aside for applicants with 2019 gross receipts from $500,000 to $1.5 million; and an additional $500 million set aside for applicants with 2019 gross receipts of $50,000 or less.

The SBA may provide funding of up to $5 million per location, not to exceed $10 million for the applicant and any affiliated businesses. The minimum award is $1,000. Calculations for payment are:

• Calculation 1. For applicants in operation before or on Jan. 1, 2019: 2019 gross receipts minus 2020 gross receipts minus Paycheck Protection Program (PPP) loan amounts.
• Calculation 2. For applicants that began operations partially through 2019: (Average 2019 monthly gross receipts times 12) minus 2020 gross receipts minus PPP loan amounts.
• Calculation 3. For applicants that began operations on or between Jan. 1, 2020, and March 10, 2021, that have not yet opened but have incurred eligible expenses: Amount spent on eligible expenses between Feb. 15, 2020, and March 11, 2021, minus 2020 gross receipts minus PPP loan amounts.

Entities that began operations partially through 2019 may elect to use either Calculation 2 or Calculation 3.

Funds may be used for specific expenses, including:

• Business payroll costs, including sick leave
• Payments on any business mortgage obligation
• Business rent payments, not including prepayment of rent
• Business debt service, both principal and interest, not including any prepayment of principal or interest
• Business utility payments
• Business maintenance expenses
• Construction of outdoor seating
• Business supplies, including protective equipment and cleaning materials
• Business food and beverage expenses, including raw materials
• Covered supplier costs
• Business operating expenses

For purposes of this program, gross receipts do not include:

• Amounts received from first- or second-draw PPP loans
• Amounts received from Economic Injury Disaster Loans (EIDL)
• Advances on EIDL (EIDL Advance and Targeted EIDL Advance)
• State and local grants
• SBA Section 1112 payments

If you think this opportunity fits with your organization, please reach out to us at Morgan & Associates with starting this application.