Latest Update: On April 17, 2021, the SBA officially announced key details about the Restaurant Revitalization Fund grant application process at www.sba.gov/restaurants — this website provides in-depth details about the program and also supplies a sample application so you can get a better sense of how to apply. We will update this article shortly with updated information from the SBA.
On March 11, 2021, President Biden signed the latest $1.9 trillion COVID-19 relief bill (the “American Rescue Plan Act of 2021,” or ARPA) into law. Included within this stimulus package is a much-needed $28.6 billion Restaurant Revitalization Fund that is modeled after the RESTAURANTS Act. The Restaurant Revitalization Fund is designed to specifically support the recovery of small and medium-sized food and beverage businesses.
This latest coronavirus stimulus package comes at a critical time when restaurants around the country are preparing to reopen their doors, staying afloat on off-premise revenue, re-hiring staff, and seeking additional options for restaurant relief.
Funding will take the form of grants that will be awarded by the United States Small Business Administration (SBA). Individual businesses are eligible to receive up to $5 million in grants, while businesses with up to 20 locations are eligible to receive a maximum of $5 million per physical location with up to $10 million in aggregate across its affiliates (typically, a restaurant group).
What Is a Grant?
Generally, a grant from the government is free money that is intended for a specific purpose; unlike a loan, the grant amount does not need to be repaid. Restaurant Revitalization Fund grants are not treated as taxable gross income by the IRS.
DISCLAIMER: This article is for informational purposes only and is not legal or tax advice. If you have specific legal or tax questions, you should consult your attorney or tax advisor, as appropriate. Toast is not affiliated with the SBA, and does not act as a lender. SBA loan programs are subject to eligibility and terms and conditions apply. Please visit sba.gov for more details.
And, just so you know, information about the Restaurant Revitalization Fund is rapidly emerging, with new information coming out every day. The information in this article is up to date as of March 30, 2021 but is subject to change. We’ll do our best to provide you with updated information as it becomes available.
Business Eligibility Criteria
Any restaurant is eligible for a Restaurant Revitalization Fund grant if it’s considered a place where public or patrons can gather for the primary purpose of being served food or drink, including:
Food: restaurants, food stands, food trucks, food carts, caterers
Drink: saloons, inns, taverns, bars, lounges, brewpubs, tasting rooms, taprooms, or licensed facilities or premises of a beverage alcohol producer where people can sample, taste, or purchase products
Businesses in the above categories that are located in an airport terminal or that are Tribally-owned
Businesses that aren’t eligible include the following:
State or local government-operated businesses
Businesses that own or operate (together with any affiliated businesses) more than 20 locations, whether under the same name or not
Businesses with a pending application for or have received a grant as part of the “Save our Stages Act”
For the first 60 days after the enactment of the bill, until May 10, 2021, $5 billion of the $28.6 billion fund will be dedicated to businesses that had a maximum of $500,000 in gross receipts during 2019. The end date for this prioritization period may be changed by the SBA at its discretion.
For the first 21-day period beginning on the day that the SBA begins to award grants through the Restaurant Revitalization Fund, grants will be prioritized for socially and economically disadvantaged small businesses as well as small businesses owned and controlled by women or veterans. Applicants must submit a self-certification of eligibility for priority with the grant application during this period.
You can find the definition of the prioritized groups here:
Definition of women owned and controlled can be found on page 17 here
Definition of veteran owned and controlled can be found on page 25 here
Definition of socially and economically disadvantaged can be found on page 124 here
Grants will be awarded to eligible businesses on a first-come first-served basis as received by the SBA. This applies to both prioritization periods above as well as for general applications after those periods end.
Grants will be determined primarily based on whether a business experienced a pandemic-related loss, by comparing its revenue from 2020 with its pre-pandemic revenue in 2019. Additional factors include the length of time a business has been operating and whether it has received any Paycheck Protection Program ("PPP") loans. Grant amounts can potentially change later on depending on additional formulas as set by the SBA as well as any adjustments to ensure grants are dispersed in an equitable and fair manner. Grant amounts will also be reduced by the amount of prior first draw and second draw PPP loans received by a business in 2020 or 2021. The estimated grant amounts calculated with formulas below must yield a value greater than $0 to be eligible.
Here’s how to estimate the grant size your business is eligible for:
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If a business is unable to use their full grant amount by December 31, 2021 or permanently closes before December 31, 2021, all remaining funds must be returned to the government.
Grants from the Restaurant Revitalization Fund must be used on the following eligible expenses:
Mortgage and rent payments (no prepayment for either), utilities, outdoor seating construction, and maintenance (on walls, floors, decks, furniture, fixtures, and equipment)
Supplies, including protective equipment and cleaning materials
Food and beverage expenses within the scope of normal business practice
Covered supplier costs and covered operational expenditures (as defined by the SBA under the PPP program), which include business software and cloud services
Any other expenses deemed essential by the SBA
Grants can be spent on eligible expenses incurred from February 15, 2020 through December 31, 2021, though the SBA may extend the end date of this period to March 11, 2023 at the latest.
Manage Your Restaurant's Finances During COVID-19
In this Excel spreadsheet, you'll find customizable templates, tools, and calculators to help you analyze and optimize your restaurant financials.
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Grant application process
Details on how to apply for a grant have not yet been made available by the SBA. We’ll provide you with updated information as it becomes available.
To apply for a grant, businesses must make a “good faith certification” that the uncertainty of current economic conditions makes it necessary for them to request a grant to support their ongoing operations and that they have not applied for or received any grants that are part of the Save our Stages Act.
The SBA will prioritize the ability of each applicant to use their “existing business identifiers” over requiring other forms of registration or identification that may not be common to their industry and imposing additional burdens on applicants.
What will my business need in order to apply for a Restaurant Revitalization Fund grant?
On March 30, 2021, the SBA announced via Twitter that “restaurant owners who seek to participate in the Restaurant Revitalization Fund will not need to sign up for a SAM.gov account or be required to have a DUNS number” and that more information will follow.
Beyond this development, there is still no clarity around which “existing business identifiers” will be accepted by the SBA and there have been no updates to the actual application process. Possible existing business identifiers that the SBA may require could include the EIN and ITIN, as defined by the IRS below; however, no confirmed identifiers have been provided by the SBA yet.
Employer Identification Number (EIN): the EIN, also known as a federal tax identification number, is a nine-digit number (in the format NN-NNNNNNN) assigned by the IRS. It's used to identify the tax accounts of employers and certain others who have no employees. The IRS uses the number to identify taxpayers who are required to file various business tax returns.
Individual Taxpayer Identification Number (ITIN): the ITIN is a tax processing number only available for certain nonresident and resident aliens, their spouses, and dependents who cannot get a Social Security Number (SSN). It is a 9-digit number, beginning with the number "9", formatted like an SSN (NNN-NN-NNNN).
We’ll make updates to this page as more information about the application process comes out.
Which stimulus package program is right for me?
To make sure your restaurant gets every dollar of funding it needs during this challenging time, it will be important to apply for grants and loans as soon as possible. You can take advantage of Employee Retention Tax Credits, Economic Injury Disaster Loans, PPP loans and also receive a grant — just note your grant funding may be reduced by the PPP loan amount you receive.
There’s still an estimated $72 billion remaining in PPP funding available for distribution as of March 28, 2021 ($212 billion in 2021 loans approved with a total third-round PPP fund size of $284 billion). You can read more about how to apply for a PPP loan here; however, the SBA is only offering PPP loans until May 31, 2021, and is providing an additional 30-day period ending June 30, 2021 for the SBA to process applications that are still pending. Separately, the ARPA approved an additional $7.25 billion in funding for fiscal year 2021 that will remain available until expended. You can read about President Biden’s program changes here; to ensure equity, PPP loans were made more accessible to businesses and nonprofits with fewer than 20 employees alongside sole proprietors, independent contractors, and self-employed individuals.
Since the Restaurant Revitalization Fund is a brand new program, it will be important to get an application into the SBA’s system first before the funds are fully drawn down. In the meantime, you can check out this article for more information on COVID-19 restaurant relief around the country.