There is good news for restaurants: relief is on the way. President Biden recently signed the Restaurant Revitalization Fund into law, a federal grant relief program that will award $28.6 billion in funds to help struggling independently owned restaurants and bars. The passing of this relief program marks a milestone in the Independent Restaurant Coalition (IRC)’s tireless lobbying efforts on behalf of the restaurant industry and comes not a moment too soon: According to the IRC, there are more than 500,000 independent restaurants in the U.S. which employ 11 million people. And no single industry has contributed more to unemployment during the pandemic than the restaurant industry, counting more than 2.5 million unemployed restaurant and bar workers.
On April 13, the IRC hosted a town hall with guests from the Small Business Association, including associate administrators Patrick Kelley and Julie Verratti, to share the latest on the application process for the Restaurant Revitalization Fund. The online application will be opening soon, and applicants are encouraged to get their materials organized now and be ready to apply on day one. To access a video of the town hall, click here.
As part of his commitment to supporting the restaurant community, chef Aaron Deal, founder of Deal & Associates Restaurant Consulting in Roanoke, VA, along with journalist Layla Khoury-Hanold, have put together what we hope is a helpful primer for restaurant owners getting ready to apply for the Restaurant Revitalization Fund. Things are constantly being updated, so please visit Saverestaurants.com for the most up-to-date information.
Entities eligible to apply for the Restaurant Revitalization Fund
Restaurants, which by definition also includes food stands, food trucks, food carts, caterers, bars, saloons, lounges, taverns, snack and non-alcoholic beverage bars (which can include, for example, coffee and ice cream shops), bakeries, brew pubs, tasting rooms, tap rooms, breweries, microbreweries, wineries and distilleries, and inns. Licensed facilities or premises of a beverage alcohol producer where the public may taste, sample, or purchase products.
Note: Restaurant Revitalization Fund applicants no longer need to sign up for a SAM.gov account or have a DUNS or CAGE identifier.
Businesses that are not eligible
Businesses are not eligible if they are part of an affiliated group with more than 20 locations, are a state or local government operated business, have pending applications under the Save our Stages program, if they are publicly traded, or if the business has permanently closed.
Calculating your grant amount
The maximum grant amount is $5 million per individual restaurant and $10 million per restaurant group.
For businesses in operation before 2019:
Take your 2019 gross revenue minus 2020 gross revenue and subtract the total amount of all PPP loans you received.
For business that opened in 2019:
Take the average of your 2019 monthly gross revenue and multiply that average by 12, then subtract your 2020 actual revenue and any PPP loans you received.
Note: businesses that opened in 2019 may also use the calculation below (guidance provided by the SBA on the town hall suggests using the one that gives business owners the potential for the most amount of funds)
For businesses that opened in 2020 or in 2021 prior to March 11*:
You are eligible to receive funding equal to the eligible expenses incurred in 2020 (or in 2021 prior to March 11) minus gross revenue (2020 only) and any PPP funding you received.
*If you spent any money to get your doors open (even if you didn’t actually open) by March 11, 2021, then the business is eligible to apply
Note: Using EIDL loans and ERTC proceeds do not disqualify businesses from participating in the program.
This includes business operating expenses, such as rent, payroll, utilities (such as gas, electric, water, CO2 contracts), maintenance expenses, construction of outdoor seating, supplies. Eligible expenses also include business debts, including principle and interest (though you can’t pre-pay any loans).
Other examples provided by the SBA on the town hall include insurance, licensing fees, Point of Sale contracts or equipment. If you are an entity within the alcoholic beverage manufacturing space, eligible expenses also include cost of goods sold and raw materials, such as malts, hops, or yeasts.
Covered period for using eligible expenses
Eligible expenses include those incurred from Feb 15, 2020 to March 11, 2023. If you do not spend all of the funds by March 11, 2023, you will need to return the remainder to the government.
There will be a 21-day priority window for women- or veteran-owned restaurants, and socially and economically disadvantaged businesses
Ownership is defined as 51% or more.
The definition of socially and economically individuals (as written in the statute in the Restaurants Revitalization Fund and read aloud during the town hall): “Socially disadvantaged individuals are those who have been subjected to racial or ethnic prejudice or cultural bias because of their identity as a member of a group without regard to their individual qualities. Individuals who are members of the following groups are presumed to be socially disadvantaged: Black Americans, Hispanic Americans, Native Americans (including Alaskan natives and native Hawaiians), Asian Pacific Americans, or sub-continent Asian Americans. Economically disadvantaged individuals are those socially disadvantaged individuals whose ability to compete in the free enterprise system has been impaired due to diminished capital and credit opportunities as compared to others in the same business area who are not socially disadvantaged.”
As Nya Marshall, owner of IVY Kitchen in Detroit, pointed out, the 21-day priority window provision is especially critical for the BIPOC community. As a business owner, she was not able to access funds through other previously offered federal relief programs, sharing that “During the initial stages of the Paycheck Protection Program, only 130 Black-owned restaurants received PPP loans in excess of $150,000—less than a quarter percent of all loans awarded. At least 13% of small businesses are Black-owned.”
Prepare now and apply on day one
Start gathering supporting materials, which can include 2019 tax returns, 2020 tax returns, bank statements, or profit and loss income statements. Even if your business doesn’t fall within the priority window reserved for women- and veteran-owned restaurants and socially and economically disadvantaged businesses, you should still submit your application as soon as the portal opens.
Help get the word out
The SBA’s Julie Verratti urges everyone in the restaurant community to inform others about the Restaurant Revitalization Fund. “Tell everyone you know. Get the word out so that we get to smallest of the small, underserved communities so folks have access to these much-needed funds.”