Restaurant Revitalization Fund: What Employers Need to Know

As part of the American Rescue Plan Act (ARPA), the Small Business Administration (SBA) set aside $28.6 billion dollars for a grant program called the Restaurant Revitalization Fund (RRF). The RRF was designed to bring aid to restaurants, bars, and other “eating establishments” that have suffered revenue losses due to the COVID-19 pandemic. Unlike the Paycheck Protection Program, qualified establishments can apply directly through the SBA rather than having to go through a lender.

Who Qualifies for the Grant?

According to guidance released by the SBA, an eating establishment that has experienced a pandemic-related revenue loss but has not permanently close can qualify for this grant. The SBA has clarified that to be considered an eating establishment, a business must have at least 33% of its 2019 gross receipts from on-site sales of food and drink.

The list of businesses that can qualify as an Eating Establishment includes:

• Restaurants;
• Food stands, food trucks, and food carts;
• Caterers;
• Bars, saloons, lounges, and taverns;
• Licensed facilities or premises of an alcoholic beverage 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, and taprooms;
• Breweries and microbreweries;
• Wineries and distilleries; and
• Inns

Qualified establishments must be able to show that they have incurred a pandemic-related revenue loss, either by showing that their gross receipts for calendar year 2019 exceed those of 2020, or:

• If an eating establishment was not in operation for the entire 2019 year, then the difference between (i) the product of the average monthly gross receipts of the Eligible Entity in 2019 multiplied by 12 and (ii) the product of the average monthly gross receipts of the Eligible Entity in 2020 multiplied by 12 is their pandemic-related revenue loss.
• If an eating establishment opened during the period beginning on January 1, 2020, and ending on March 10, 2021, then the Pandemic-Related Revenue Loss is the amount of its Payroll Costs incurred minus any gross receipts received.
• If an Eating Establishment opened during the period beginning on January 1, 2020, and ending on March 10, 2021, then the Pandemic-Related Revenue Loss is the amount of its Payroll Costs incurred minus any gross receipts received.

Calculating the Grant Amount

The grant amount to an eligible establishment is not to exceed $5 million per location and $10 million in the aggregate. It is calculated by taking the individual establishment’s pandemic-related revenue loss and reducing it by the amount of any PPP loans, SBA Economic Injury Disaster Loan, and any other state or local pandemic-relief grants.

Prioritized Groups

The SBA has prioritized awarding funds to businesses that are at least 51 percent owned and controlled by individuals who are women, veterans, and/or “socially and economically disadvantaged” groups. During the initial 21-day period, grants will be awarded only to eligible entities owned and controlled by those in these prioritized groups. Applicants are to self-certify themselves for this grouping.

What Can the Grant Be Used For?

The SBA released specific guidance on what the grant award can be used for. The below list contains the qualified expenses, which must have been incurred during the “Covered Period” of February 15, 2020 through the earlier of March 11, 2023, or the date on which the business permanently closes:

• Business payroll costs, which include sick leave, group health care, life, disability, vision or dental premiums, and insurance benefits during periods of paid sick, medical, or family leave;
• Mortgage obligations, including principal and interest;
• Rent, including rent under a lease agreement;
• Debt service;
• Utility payments for electricity, gas, water, telephone, Internet access, or any other utility that is used in the ordinary course of business for which service began before March 11, 2021;
• Maintenance expenses including maintenance of walls, floors, fixtures, equipment and furniture;
• Construction of outdoor seating;
• Supplies, including personal protective equipment and cleaning materials;
• Food and beverage expenses, including raw materials for beer/wine/spirits;
• Covered supplier costs, which must be essential and pursuant to a contract or order in effect before or during the Covered Period;
• Operating expenses, which must be necessary and mandatory for the business and do not include expenses outside of an entity’s day-to-day activities.

All recipients will have until March 11, 2023 to spend the grant proceeds and will be required to report to the SBA at the end of each year how it has used the funds to date. The SBA may also request supplemental documentation to validate the use of the funds.

How to Apply

Eligible entities can apply one of three ways:

• Via their SBA POS Restaurant Partner system if they use one.
• Directly through the SBA at https://restaurants.sba.gov/
• Via phone by calling 884-279-8898