On March 11, 2021, the American Rescue Plan Act (ARPA) became public law, establishing the Restaurant Revitalization Fund (RRF). The ARPA appropriated $28.6 billion for the U.S. Small Business Administration (SBA) to provide financial assistance to restaurants, bars, and other similar places of business that suffered revenue losses related to the COVID-19 pandemic. The SBA is and will continue accepting applications for RRF funds subject to the availability of these funds. The appropriated funds will remain available until expended. Priority of the grants may be given to an applicant that is: 1) a small business concern that is at least 51% owned by one or more individuals who are women, veterans, or socially and economically disadvantaged and 2) managed or controlled by one or more women, veterans, or socially and economically disadvantaged individual.
Eligible Applicants
Eligible applicants are “entities who have experienced pandemic-related revenue loss” and include the following:
- Restaurants
- Food stands, food trucks, food carts
- Caterers
- Bars, saloons, lounges, taverns
- Licensed facilities or premises of a beverage alcohol producer where the public may taste, sample, or purchase products
- Other similar places of business which the public or patrons visit for the primary purpose of being served food or drinks
- Snack and nonalcoholic beverage bars
- Bakeries*
- Brewpubs, tasting rooms, taprooms*
- Breweries and/or microbreweries*
- Wineries and distilleries*
- Inns**
* In order to be eligible for RRF funds, bakeries, brewpubs, tasting rooms, taprooms, breweries, microbreweries, wineries, and distilleries, must provide documentation with their applications that on-site sales comprised at least 33% of gross receipts in 2019. For businesses that opened in 2020 or that have not yet opened, the Applicant’s original business model should contemplate that on-site sales to the public comprise at least 33% of gross receipts.
** In order to be eligible for RRF funds, inns must provide documentation with their application that on-site sales of food and beverage comprised at least 33% of gross receipts in 2019. For inns that opened in 2020 or that have not yet opened, the Applicant’s original business model should contemplate that on-site sales comprise at least 33% of gross receipts.
Eligible Expenses
Funds obtained from the RRF must be used for eligible expenses listed below incurred beginning February 15, 2020, and March 11, 2023. In other words, RRF funds can be sought for eligible expenses already incurred (and even paid) and eligible expenses that have not yet been incurred:
- Business payroll costs (including sick leave)
- Payments on any business mortgage obligation
- Business rent payments (this does not include prepayment of rent)
- Business debt service (both principal and interest; but this does not include any prepayment of principal or interest)
- Business utility payments
- Business maintenance expenses
- Construction of outdoor seating
- Business supplies (including protective equipment and cleaning materials)
- Business food and beverage expenses (including raw materials)
- Covered supplier costs
- Business operating expenses
Restaurant Revitalization Fund Application Process
An application for funds from the RRF must be made on SBA Form 3172 and the Applicant must certify, under penalty of law that:
- “Current economic uncertainty makes this funding request necessary to support the ongoing or anticipated operations of the Applicant.”
- “All funds must be used only on eligible uses within the covered period, which is the period beginning on February 15, 2020, and ending on March 11, 2023. If the business permanently closes, the covered period will end when the business permanently closes or on March 11, 2023, whichever occurs sooner. Awardees that are unable to use all of the funds received on eligible expenses by the end of the covered period must return any unused funds to Treasury.”
All funds received from the RRF must be deposited into the “applicant’s commercial business account.” If the business is a sole proprietorship, without a commercial account, the SBA will require “supporting documentation to demonstrate that this account is used for restaurant operations, and it is owned by the sole proprietor.”
Restaurant Revitalization Fund Reporting Requirements
All Applicants have until March 11, 2023, to use RRF funds. “Not later than December 31, 2021, all Applicants are required to report through the application portal how much of their award has been used against each eligible use category.” If the Applicant fully expends its funds prior to December 31, 2021, it will be asked to certify in the application portal that proceeds have been used on eligible expenses. All Applicants that do not fully expend their RRF funds prior to December 31, 2021, are required to complete annual reporting submissions until the Applicant has fully expended its RRF funds or the period of performance expires.
Eligible Amounts
The amount an applicant is eligible to receive is as follows:
- Calculation 1: for applicants in operation prior to or on January 1, 2019: 2019 gross receipts minus 2020 gross receipts minus Paycheck Protection Program (“PPP”) loan amounts
- Calculation 2: for applicants that began operations partially through 2019: (average 2019 monthly gross receipts x 12) minus 2020 gross receipts minus PPP loan amounts
- Calculation 3: for applicants that began operations on or between January 1, 2020, and March 10, 2021, and applicants not yet opened but have incurred eligible expenses: amounts spent on eligible expenses between February 15, 2020, and March 11, 2021, minus 2020 gross receipts minus 2021 gross receipts (through March 11, 2021) minus PPP loan amounts
- Those entities that began operations partially through 2019 may elect to use either calculation 2 or calculation 3
“Gross receipts” means all revenue in whatever form received or accrued from whatever source, including revenue from the sales of products or services, interest, dividends, rents, royalties, fees, or commissions, reduced by returns and allowances.
Further, the amount of PPP funds that an Applicant has received will impact the amount of RRF funds the Applicant may be eligible to receive.
Economic Relief for Restaurants
The Restaurant Revitalization Fund provides an opportunity for eating establishments to procure much-needed financial relief due to the COVID-19 pandemic. But, as with many grant and aid programs, funds are limited and will be disbursed on a “first-come, first-served basis.” The food, beverage, and hospitality attorneys at Norris McLaughlin are prepared to assist with the application process.
This legal advisory was written by John F. Lushis, Jr., and Theodore J. Zeller III, Chair of the Norris McLaughlin Liquor Law, Licensing, Manufacturing, and Distribution Industry Group. If you have any questions about this post or any related matters, please feel free to contact John at jlushis@norris-law.com or Ted at tzeller@norris-law.com.
This legal advisory provides information to our clients and friends about current legal developments of general interest in the area of food, beverage, and hospitality law. The information contained in this advisory should not be construed as legal advice, and readers should not act upon such without professional counsel. Copyright © 2021 Norris McLaughlin, P.A.
Posted in: Food, Beverage & Hospitality, John F. Lushis, Jr., Liquor Law, Licensing, Manufacturing and Distribution, Theodore J. Zeller III |