A year after restaurants closed their doors as the COVID-19 pandemic intensified, a new $28.6 billion fund from the Small Business Administration (SBA) is expected to breathe new life into the industry.
The American Rescue Plan Act that President Joseph Biden signed into law earlier this month created a new federal grant program for restaurant owners with 20 or fewer locations: The Restaurant Revitalization Fund (RRF). While Congress is urging the SBA to start accepting applications and disbursing the funds within weeks, the grant program is still being set up and is not yet accepting applications.
Restaurant Revitalization Fund grants will be distributed by the Small Business Administration, but can be spent on a wider range of expenses than previous relief programs, including rent, utilities, supplies, food and beverage inventory, payroll, and operational expenses.
Here’s what we currently know about the RRF:
Expected to be Administered Directly by the SBA
- The SBA has yet to issue rules or any other guidance regarding the application procedure for RRF grants, except that applicants will have to make a good faith certification to the SBA that the uncertainty of current economic conditions makes the applicant’s grant request necessary to support its ongoing operations.
- Restaurants, food trucks, bars, brewpubs and franchisees that meet the size requirements (under 20 locations as of March 13, 2020), among other establishments.
- Cannot own or operate more than 20 units.
- No publicly traded companies.
- For multi-brand operators, the 20-unit cap applies across brands.
- Uncertainty of current economic conditions makes the grant request necessary to support ongoing operations.
- The entity has not applied for nor received an SBA Shuttered Venue Operators grant. (The SBA is still building the Shuttered Venue Operators grant program and expects to open applications in early April.)
Use of Funds
- Grant funds may be used to cover payroll costs, rent payments, utilities, maintenance expenses, supplies, food and beverage expenses within the normal scope of business practice, covered supplier costs, operational expenses, paid sick leave, outdoor seating construction, personal protective equipment (PPE), cleaning materials and other expenses the SBA deems essential.
- Eligible expenses are those incurred from February 15, 2020 to December 31, 2021, or a date determined by the SBA.
- Up to $10 million, with a maximum grant amount of $5 million per physical location.
- Cannot exceed the “pandemic-related” revenue loss of the applicant.
- Pandemic-related revenue losses for business are reduced by any amounts received from Paycheck Protection Program (PPP) First Draw and Second Draw loans in 2020 and/or 2021.
Program Funds: $28.6B ($5B reserved for restaurants with 2019 annual revenue less than $500K)
- During the initial 21 days of the program, the SBA must prioritize grants to eligible applicants that are small businesses owned and controlled by women, veterans and the socially and economically disadvantaged.
Make sure you visit the SBA’s Coronavirus Relief Options page regularly for the latest information and updates. Details about the RRF grants should be available soon.