Food service establishments, including bars, restaurants, food trucks, breweries, bakeries and wineries, are eligible for up to $10 million through funding made available by the American Rescue Plan. The United States Small Business Association released application information and guidelines on Monday for the funding that doesn’t need to be repaid if protocols are followed.
The American Rescue Plan established the Restaurant Revitalization Fund to help restaurants and other food service-related businesses to remain open after economic hardships endured during the COVID-19 pandemic. The program will provide business with funding equal to their pandemic-related revenue loss up to $10 million per business and no more than $5 million per physical location.
Recipients are not required to repay the funding as long as funds are used for eligible uses no later than March 11, 2023. The uses include business mortgage expenses, rent payments, outdoor seating construction or purchasing masks and other safety equipment.
Here’s everything business-owners need to know about the Restaurant Revitalization Fund and how to apply.
Who can apply?
- Food stands, food trucks, food carts
- Bars, saloons, lounges, taverns
- Snack and nonalcoholic beverage bars
- Bakeries, which have onsite sales to the public that account at least 33% of gross receipts
- Brewpubs, tasting rooms, taprooms, which have onsite sales to the public that account at least 33% of gross receipts
- Breweries and/or microbreweries, which have onsite sales to the public that account at least 33% of gross receipts
- Wineries and distilleries, which have onsite sales to the public that account at least 33% of gross receipts
- Inns, which have onsite sales to the public that account 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
Businesses can apply through a Small Business Association-recognized Point of Sale Restaurant Partner or directly online when the program launches within the next couple of weeks. The SBA will be establishing a web portal for all applications.
A sample application can be found here.
The application will require the following documents:
- Verification for Tax Information: IRS Form 4506-T, completed and signed by the applicant. Applicants can complete this form online on the SBA platform to satisfy this requirement.
- Gross Receipts Documentation, including any of the following documents to demonstrate 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
- Brewpubs, tasting rooms, taprooms, breweries, wineries, distilleries, bakeries and inns must provide documents that onsite sales accounted for at least 33% of gross receipts for 2019. For businesses that opened in 2020, the applicant’s original business model should have included at least 33% of gross receipts in onsite sales to the public.
When to apply
The Small Business Administration plans to launch the over the next two weeks. Before that the SBA will establish a seven-day pilot period for the application portal and will conduct extensive outreach and training.
The pilot period will be used to address technical issues ahead of the public launch. Participants in the pilot will be randomly selected from existing PPP borrowers in priority groups and will not receive funds until the application portal is open to the public.
After an official launch date is announced, the first 21 days of the program will be dedicated to “priority” businesses. Following the 21-day period, all eligible applicants are encouraged to submit applications.
Priority businesses are defined as businesses that are at least 51% owned by one or more individuals who are women, veterans or socially and economically disadvantaged. The SBA defines socially disadvantaged as individuals who have been subjected to racial or ethnic prejudice or cultural bias.
The SBA defines economically disadvantaged as individuals whose 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.
How much funding is available?
The Restaurant Revitalization Fund includes $28.6 billion in funding.
The program includes $5 billion 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 $1,500,000. Another $500 million is set aside for applicants with 2019 gross receipts of not more than $50,000.
Funding from the program may not exceed $10 million total and $5 million per location. The minimum award is $1,000.
For applicants open prior to Jan. 1, 2019, the payment calculation is 2019 gross receipts minus 2020 gross receipts minus Paycheck Protection Program loan amounts.
For businesses that operated only partially in 2019, the payment calculation is the average 2019 monthly gross receipts multiplied by 12, then subtract 2020 gross receipts and PPP loan amounts.
For businesses that began operation between Jan. 1, 2020 and March 10, 2021 or applicants that have not yet opened but have incurred eligible expenses, the calculation is the amount spent on eligible expenses between Feb. 15, 2020 and March 11, 2021 minus 2020 gross receipts minus PPP loan amounts.
Allowable uses for funds
If used properly, the funds from the Restaurant Revitalization Fund do not need to be repaid.
If the funding is used for the following business expenses, the money in essence is a grant.
- Business payroll costs, including sick leave
- Payments on any business mortgage obligation
- Business rent payments (this does not include prepayment of rent)
- Business debt service, both principal and interest (this does not include 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