The Restaurant Revitalization Fund (RRF) – Small Business Support That’s Not Just for Restaurants

Thanks to recently enacted legislation, restaurants* and bars hard hit by COVID-19 could see some financial relief in coming months. The American Rescue Plan Act—signed into law March 11, 2021—establishes the Restaurant Revitalization Fund (RRF).

Relief isn’t limited to traditional restaurants. Brewpubs and tasting rooms, as well as many other eating and drinking establishments, will also qualify for restaurant grants.

Administered by the Small Business Administration (SBA), the RRF is intended to provide relief to various food establishments struggling due to the pandemic.

Is My Business Eligible for an RRF?

To qualify for RRF, applicants must not own or operate more than 20 locations in total as of March 13, 2020.

This includes affiliated business, regardless of ownership type and whether locations do business under the same or different names.

Entities eligible for the fund include the following:

  • Bars
  • Brewpubs
  • Caterers
  • Food carts
  • Food stands
  • Food trucks
  • Inns
  • Licensed facilities or premises of a beverage alcohol producer where the public may taste, sample, or purchase products
  • Lounges
  • Restaurants
  • Saloons
  • Taprooms
  • Tasting rooms
  • Taverns

Similar places of business where patrons go for the primary purpose of being served food or drink are also eligible.

Businesses with a pending or successful grant application under the Shuttered Venue Operators Grant (SVOG) program are not eligible for an RRF grant.

What’s the Scope of an RRF Grant?

The RRF will provide $28.6 billion in relief grants to small to mid-sized restaurants:

  • Of this amount, $23.6 billion is available for the SBA to award in an equitable manner to different-sized businesses based on annual gross receipts.
  • The remaining $5 billion is available to businesses with gross receipts of $500,000 or less during 2019.

What About Paycheck Protection Program (PPP) Loans?

An eligible restaurant may receive a tax-free federal grant equal to the amount of its pandemic-related revenue loss, less any amounts received from first and second draw Paycheck Protection Program (PPP) loans in 2020 and 2021.

Grant amounts are capped at $10 million per business with a $5 million limit per physical location.

Funds may be used to cover eligible expenses retroactively to February 15, 2020.

How Are RRF Grants Calculated?

Under the RRF, an eligible business can receive a grant equal to its pandemic-related revenue loss. This is the difference between 2020 gross receipts and 2019 gross receipts, less any amounts received from PPP loans.

Eligible businesses that began operations in 2019 will need to annualize their average monthly gross receipts for 2019 and compare them to their annualized monthly gross receipts for 2020.

Eligible businesses that began operations in 2020 will calculate their grant amount by taking the difference between qualified grant expenses and their 2020 gross receipts.

If an eligible business is not yet in operation as of the application date but has incurred eligible expenses, then its grant will be equal to those expenses.

What Expenses Are Eligible?

Qualifying RRF grant recipients may use the funds for more types of expenses than those allowed under the PPP, including food and beverage inventory.

Items that can be included are as follows:

  • Certain supplier costs
  • Certain operational expenses
  • Maintenance, including construction to accommodate outdoor seating
  • Normal food and beverage inventory
  • Paid sick leave
  • Payroll (not including wages used for the Employee Retention Credit, or ERC)
  • Personal protective equipment, supplies, and cleaning materials
  • Principal or interest on mortgage obligations
  • Rent
  • Utilities

Additional expenses incurred from February 15, 2020, to December 31, 2021, that the SBA determines to be essential to maintaining operations are also eligible.

When Can I Apply?

Application release date details are presently unknown.

However, on March 15, 2021, the National Restaurant Association shared an expected timeline:

  • April 2021 – SBA releases rules and applications
  • May/June 2021 – Priority period (21 days) for women-, veteran-, and disadvantaged/minority-owned businesses
  • May/June 2021 – RRF open for all eligible restaurants

If RRF funds have not been exhausted after 60 days, the SBA will have discretion to administer grants to eligible businesses without regard to annual gross receipts.

*“Restaurant” is the umbrella term denoting all food and drink establishments eligible under the RRF.

Disclaimer: The information contained in this communication, including attachments and enclosures, is not intended to be a complete analysis of all related issues. Nor is it sufficient to avoid tax-related penalties. It has been prepared for informational purposes and general guidance only and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is made as to the accuracy or completeness of the information contained in this publication, and Perkins & Company, its members, employees and agents accept no liability, and disclaim all responsibility, for the consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.