The SBA plans to launch a phased rollout of the $28.6 billion Restaurant Revitalization Fund (the “RRF”) in early April. The RRF is similar to the Paycheck Protection Program (the “PPP”), except its amounts are based on pandemic-related lost revenue rather than payroll costs and it is administered directly by the SBA instead of through bank loans guaranteed by the SBA.
What Businesses are Eligible for the RRF Grant?
The businesses eligible for the RRF grant are ones where the public or patrons assemble for the primary purpose of being served food or drink, including without limitation restaurants, food stands, food trucks, food carts, caterers, saloons, inns, taverns, bars, lounges, brewpubs, tasting rooms, taprooms, and licensed facilities or premises of a beverage alcohol producer (the “Eligible Business”). The Eligible Business cannot own or operate more than 20 locations. Affiliated businesses will be considered and are defined as those businesses in which (i) the Eligible Business has an equity interest or right to profit distributions of not less than 50%, or (ii) the Eligible Business has managerial control, as determined by any arrangements or agreements in existence as of March 13, 2020.
State and local government-operated businesses, publicly-traded companies, companies owned or operating in more than 20 locations as of March 13, 2020 (regardless of whether the locations do business under the same name), and businesses that received, or have submitted an application for, a grant under the Economic Aid to Hard-Hit Small Businesses, Non-Profits and Venues Act (the Shuttered Venue Operators Grant) are not eligible for the RRF grant.
May an Eligible Business Apply for the RRF Grant if the Eligible Business Received a PPP Loan?
Eligible Businesses that have received a PPP loan may apply for the RRF grant; however, the amount of the PPP loan must be subtracted from the RRF grant calculation.
What is the Amount of the RRF Grant?
The RRF provides grants up to $10 million per Eligible Business or $5 million per physical location of the Eligible Business.
Pandemic-related revenue loss is calculated by subtracting the 2020 gross receipts of the Eligible Business from the 2019 gross receipts of the Eligible Business. If the Eligible Business was not in operation for the entirety of 2019, then the calculation is the difference between (i) the average monthly gross receipts in 2019 multiplied by 12 and (ii) the average monthly gross receipts in 2020 multiplied by 12.
What Expenses May the RRF Grant be Used For?
The RRF grant may be used for the following expenses during the covered period, currently defined as February 15, 2020 through December 31, 2021 (the “Covered Period”):
- Payroll costs and paid sick leave;
- Principal and interest payments on mortgages, not including prepayments of principal;
- Rent payments, not including prepayments;
- Utilities;
- Maintenance expenses (including to accommodate outdoor seating);
- Operational expenses;
- Certain covered supplier costs;
- Supplies, including personal protective equipment and cleaning materials;
- Food and beverage expenses within the Eligible Business’s scope of normal business practice before the Covered Period or other dates as determined by the SBA; and
- Any other expenses the SBA determines to be essential to maintaining the Eligible Business.
Does the RRF Grant Need to be Paid Back?
Any unused portion of the RRF grant will need to be paid back to the Treasury. In addition, if the Eligible Business permanently closes before December 31, 2021, that Eligible Business must pay back the RRF grant.
What is the Certification Requirement for the Application?
As part of the application, the Eligible Business must make a good faith certification that the RRF grant is necessary to support ongoing operations and that the Eligible Business has not applied for or received funding under the Shuttered Venue Operators Grant.
When Does the Application Process Begin?
The application process is not yet open, but we anticipate it opening in the very near future. We recommend that you prepare to apply right away, as funds will be available on a first-come first-served basis.
The RRF is providing a 21-day priority window to Eligible Businesses that are owned and operated or controlled by women, veterans, or socially and economically disadvantaged individuals and has set aside $5 billion for the smallest Eligible Businesses, meaning those with gross receipts of $500,000 or less in 2019.
We will be monitoring and providing updates as new information becomes available. The attorneys at Winne Banta Basralian & Kahn, P.C. are available to answer your questions and guide you through your tough business and financing decisions.