SBA Releases Restaurant Revitalization Fund Guidance

On April 17, SBA released guidance related to the Restaurant Revitalization Fund. This program, created by the American Rescue Plan Act (ARPA) that was enacted on March 11, 2021, aims to provide relief to restaurants, bars, and similar eligible businesses who were impacted by the COVID-19 pandemic.

General Overview

The Restaurant Revitalization Fund provides grants to eligible businesses, including restaurants, food stands, food trucks, food carts, caterers, bars, saloons, lounges, taverns, snack and nonalcoholic beverage bars, and licensed facilities or premises of a beverage alcohol producer where the public may taste, sample, or purchase products. In addition, bakeries, brewpubs, tasting rooms, taprooms, breweries, microbreweries, wineries, and distilleries may be eligible if onsite sales to the public comprise at least 33% of gross receipts, and inns may be eligible if onsite sales of food and beverage to the public comprise at least 33% of gross receipts.

Grant Amount

For all applicants in operation as of January 1, 2019, grant amounts will be calculated by determining 2019 gross receipts minus 2020 gross receipts minus Paycheck Protection Program (PPP) loan amounts. Amounts will be capped to $5 million per location, not to exceed $10 million for the total applicant and its affiliated businesses. No awards will be made under $1,000.

When determining gross receipts, applicants should not include PPP loans, Economic Injury Disaster Loans (EIDL), EIDL Advances, Targeted EIDL Advances, state and local grants (via CARES Act or otherwise) or amounts paid on behalf of SBA loans through Section 1112 of the CARES Act.

Fund Uses

Restaurant Revitalization Funds may be used for certain business payroll costs (including sick leave and group health care, life, disability, vision or dental insurance premiums), payments on business mortgage obligations, rent, principal and interest payments, utilities, maintenance expenses, construction of outdoor seating, business supplies (including personal protective equipment and cleaning materials), business food and beverage expenses (including raw materials), covered supplier costs as defined by the program, and business operating expenses as defined by the program. Awardees must use all funds by March 11, 2023 on eligible expenses incurred between February 15, 2020 and March 11, 2023. Unused funds must be returned.

Grant recipients will be asked to complete annual reporting submissions beginning no later than December 31, 2021 regarding their use of funds, until the funds have been depleted. SBA may ask for supporting documentation at any time.

Applications

Although the SBA has not announced when it will begin accepting applications, ARPA indicates that the SBA can only fund certain entities in the first 21 days of the application period. Specifically, applications from small businesses that are at least 51% owned by women, veterans, or socially and economically disadvantaged individuals will be considered for funding. Other entities may apply during this time, but their applications will not be considered for funding until the 21-day priority period ends. A sample application can be found at https://www.sba.gov/document/sba-form-3172-restaurant-revitalization-funding-application-sample.

Next Steps

As demand is expected to exceed funding availability, interested businesses should carefully review SBA guidance and confirm their eligibility. Eligible entities may wish to begin preparing documentation and the draft application, understanding that the application may be changed before the application portal goes live. SBA guidance can be found as follows:

• General Program Overview: https://www.sba.gov/funding-programs/loans/covid-19-relief-options/restaurant-revitalization-fund
• Restaurant Revitalization Funding Program Guide: https://www.sba.gov/document/support-restaurant-revitalization-funding-program-guide
• Draft Application: https://www.sba.gov/document/sba-form-3172-restaurant-revitalization-funding-application-sample

For assistance or questions regarding the Restaurant Revitalization Fund, please contact your HBK Advisor.