Written by Anna Nagornaia – Associate, Wendel Rosen’s Business Practice Group
On April 17, 2021, the Small Business Association (SBA) released a comprehensive Restaurant Revitalization Fund (RRF) Program Guide outlining eligibility and the application process. Restaurants and other foodservice entities can now start preparing their RRF Grant Applications (SBA Form 3172). The SBA has explicitly stated not to submit RRF forms at this time.
How to Apply?
Restaurants and other foodservice entities can apply through SBA-recognized Point of Sale Restaurant Partners or directly with the SBA in a forthcoming online application portal.
Please see my previous article about required documentation.
In addition to the core documentation required for all applicants, brewpubs, tasting rooms, taprooms, breweries, wineries, distilleries, and bakeries must provide 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 filed, state or local government forms filed, or internally created reports from inventory management, sales reporting, or accounting software.
Inns that are applying for the RRF grant must provide documents evidencing that onsite sales of food and beverage to the public comprise at least 33.00% of gross receipts for 2019.
Foodservice entities, other than restaurants, that opened in 2020, must provide documentation evidencing that the original business plan contemplated at least 33.00% of gross receipts in onsite sales to the public.
How Much Can You Get?
The SBA may provide funding up to $5 million per location, not to exceed $10 million total for the applicant and any affiliated businesses. The minimum award is $1,000. So, if your business requires less than $1,000, you are not eligible for the RRF grant.
How Much Time Do You Have To Use the Money?
You must use your entire RRF grant by March 11, 2023 on eligible expenses incurred beginning on February 15, 2020 and ending on March 11, 2023. If your business permanently closes before March 11, 2023, the covered period will end when the business permanently closes.
Awardees that are unable to use all of the funds on eligible expenses by the end of the covered period must return any unused funds.
What are Eligible Expenses?
You may use the RRF grant for the following expenses during the covered period:
- 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;
- Payments on any business mortgage obligation (both principal and interest; but not prepayment of principal on a mortgage obligation);
- Business rent payments, including rent under a lease agreement (this does not include prepayment of rent);
- Business debt service (both principal and interest; this does not include prepayment of principal or interest);
- 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.
- Business maintenance expenses including maintenance on walls, floors, deck surfaces, furniture, fixtures, and equipment;
- Construction of outdoor seating;
- Business supplies, including protective equipment and cleaning materials;
- Business food and beverage expenses, including raw materials for beer, wine, or spirits;
- Covered supplier costs made by the business to a supplier for goods that:
- Are essential to the operations of the business at the time at which the expenditure is made; and
- Is made pursuant to a contract, order, or purchase order in effect at any time before you received the RRF; or
- With respect to perishable goods, a contract, order, or purchase order in effect before or at any time during the covered period;
11. Business operating expenses (expenses incurred through normal business operations that are necessary and mandatory for the business such as rent, equipment, supplies, inventory, accounting, training, legal, marketing, insurance, licenses, and fees. Business operating expenses do not include expenses that occur outside of a company’s day-to-day activities.
The SBA has stated that past-due expenses are eligible if they were incurred beginning on February 15, 2020 and ending on March 11, 2023.
Good Faith Certification
You must make a good faith certification on the RRF application that:
- Current economic uncertainty makes this funding request necessary to support the ongoing or anticipated operations of your business; and
- You do not have a pending application for and have not received a Shuttered Venue Operator grant from SBA.
There is no further explanation of what constitutes necessity. This good faith certification requirement is similar to the PPP’s loan necessity certification. Presumably, showing a reduction in revenue would indicate financial hardship. However, if your sales picked up at the time of application and the business is otherwise financially stable, we advise a further review of the necessity requirements to avoid complications down the road.
PPP and EIDL
If you received a Paycheck Protection Program (PPP) Loan, an Economic Injury Disaster Loan (EIDL), or any state and local small business grants (via CARES Act or otherwise), you can still apply for an RRF grant. Note that the amount you received through PPP, EIDL, or other grants must be subtracted from your gross receipts. If you have a pending application for a PPP loan when applying for Restaurant Revitalization funding, the SBA has made it clear that any pending PPP applications should be withdrawn.
For assistance preparing your application, you can contact the SBA call center support at 1-844-279-8898 or your local SBA District Office . If you still have questions or require additional clarifications, please contact the attorneys in Wendel Rosen’s Food & Beverage Practice Group.
 An Affiliated Business or affiliate is a business in which an eligible entity has an equity interest or right to profit distributions of not less than 50%, or in which an eligible entity has the contractual authority to control the direction of the business, provided that such affiliation shall be determined as of any arrangements or agreements in existence as of March 13, 2020.