Restaurant Revitalization Fund details come into focus

By Ken Tysiac

The Restaurant Revitalization Fund (RRF) relief program application portal will be tested in a seven-day pilot period ahead of the application launch, the U.S. Small Business Administration (SBA) announced as it revealed key details of the program.

Following the pilot, the application portal will be opened to the public, although the official application launch date won’t be announced until a later date. All eligible applicants will be able to submit applications as soon as the program opens, but for the first 21 days the SBA will prioritize reviewing applications from small businesses owned by women, veterans, and socially and economically disadvantaged individuals.

The $28.6 billion program was established by the American Rescue Plan Act, P.L. 117-2, that became law in March. The RRF awards grants of up to $5 million per physical location and is capped at $10 million per entity and affiliates. Eligible entities that have experienced pandemic-related revenue loss include:

  • Restaurants;
  • Food stands, food trucks, and food carts;
  • Caterers;
  • Bars, saloons, lounges, and taverns;
  • Snack and nonalcoholic beverage bars;
  • Bakeries, brewpubs, tasting rooms, taprooms, breweries, microbreweries, wineries, and distilleries at which on-site sales to the public comprise at least 33% of the gross receipts;
  • Inns at which on-site sales of food and beverages to the public comprise at least 33% of gross receipts; and
  • Licensed facilities or premises of a beverage alcohol producer where the public may taste, sample, or purchase products.

How to apply

Eligible businesses can apply through SBA-recognized third-party point-of-sale vendors or directly through the SBA using the online application portal.

Registration with SAM.gov is not required, and DUNS or CAGE identifiers are not necessary to apply for funding.

A sample application form is available for download for businesses that would like to prepare their applications. The form will be completed online, but the SBA requests that businesses not submit forms at this time.

To verify tax information, businesses will be required to submit IRS Form 4506-T, Request for Transcript of Tax Return, completed and signed by the applicant. This requirement can be satisfied by completing this form on the SBA platform.

For gross receipts and eligible expenses documentation, any of the following documents may be submitted:

  • Business tax returns (IRS Form 1120, U.S. Corporation Income Tax Return, or IRS Form 1120-S, U.S. Income Tax Return for an S Corporation);
  • IRS Forms 1040, U.S. Individual Income Tax Return, Schedule C, Profit or Loss From Business; IRS Forms 1040, Schedule F, Profit or Loss From Farming;
  • For a partnership, the partnership’s IRS Form 1065, U.S. Return of Partnership Income (including Forms K-1, Partner’s Share of Income, Deductions, Credits, etc.);
  • Bank statements;
  • Externally or internally prepared financial statements such as income statements or profit-and-loss statements; and
  • Point-of-sale reports, including IRS Form 1099-K, Payment Card and Third Party Network Transactions.

Eligible brewpubs, tasting rooms, taprooms, breweries, wineries, distilleries, and bakeries will need to submit documents showing evidence that on-site sales to the public comprised at least 33% of gross receipts for 2019. This may include Tax and Trade Bureau Forms 5130.9 or TTB. For businesses that opened in 2020, the applicant’s original business model should have contemplated at least 33% of gross receipts in on-site sales to the public.

Eligible inns will need to provide documents showing that on-site sales of food and beverage to the public comprised at least 33% of gross receipts for 2019. For businesses that opened in 2020, the applicant’s original business model should have contemplated at least 33% of gross receipts in on-site sales to the public.

During the first 21 days of the application period, the SBA will only process and fund applications where the applicant has self-certified that it meets the eligibility requirements for a small business that is at least 51% owned by women, veterans, or socially and economically disadvantaged individuals. Socially disadvantaged individuals are defined as 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.

Economically disadvantaged individuals are defined as those socially disadvantaged individuals whose ability to compete in the free enterprise system has been impaired due to diminished capital and credit opportunities compared with others in the same business area who are not socially disadvantaged.

Funding details and calculations

The program includes $5 billion set aside for applicants with 2019 gross receipts of $500,000 or less; an additional $4 billion set aside for applicants with 2019 gross receipts from $500,000 to $1.5 million; and an additional $500 million set aside for applicants with 2019 gross receipts of $50,000 or less.

The SBA may provide funding of up to $5 million per location, not to exceed $10 million for the applicant and any affiliated businesses. The minimum award is $1,000. Calculations for payment are:

  • Calculation 1. For applicants in operation before or on Jan. 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 times 12) minus 2020 gross receipts minus PPP loan amounts.
  • Calculation 3. For applicants that began operations on or between Jan. 1, 2020, and March 10, 2021, that have not yet opened but have incurred eligible expenses: Amount spent on eligible expenses between Feb. 15, 2020, and March 11, 2021, minus 2020 gross receipts minus PPP loan amounts.

Entities that began operations partially through 2019 may elect to use either Calculation 2 or Calculation 3.

Funds may be used for specific expenses, including:

  • Business payroll costs, including sick leave;
  • Payments on any business mortgage obligation;
  • Business rent payments, not including prepayment of rent;
  • Business debt service, both principal and interest, not including 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; and
  • Business operating expenses.

For purposes of this program, gross receipts do not include:

  • Amounts received from first- or second-draw PPP loans;
  • Amounts received from Economic Injury Disaster Loans (EIDL);
  • Advances on EIDL (EIDL Advance and Targeted EIDL Advance);
  • State and local grants; or
  • SBA Section 1112 payments.

SBA call center support is available at 844-279-8898, Monday through Friday, from 8 a.m. to 8 p.m. ET. Applicants also can get assistance through their local SBA district office.

AICPA experts discuss the latest on the PPP and other small business aid programs during a virtual town hall held every other week. The webcasts, which provide CPE credit, are free to AICPA members and $39.99 for nonmembers. Go to the AICPA Town Hall Series webpage for more information and to register. Recordings of Town Hall events are available to view for free on AICPA TV.

The AICPA’s Paycheck Protection Program Resources page houses resources and tools produced by the AICPA to help address the economic impact of the coronavirus.

Accounting firms can prepare and process applications for the PPP on the CPA Business Funding Portal, created by the AICPA, CPA.com, and fintech partner Biz2Credit.

For more news and reporting on the coronavirus and how CPAs can handle challenges related to the outbreak, visit the JofA’s coronavirus resources page or subscribe to our email alerts for breaking PPP news.

Ken Tysiac (Kenneth.Tysiac@aicpa-cima.com) is the JofA’s editorial director.

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