Restaurant Revitalization Fund faces huge funding shortfall

By Jeff Drew

Less than 10 days after its launch, the Restaurant Revitalization Fund (RRF) has less than half the money it needs to fund a flood of relief requests from one of the sectors of the economy hardest hit by the COVID-19 pandemic.

The U.S. Small Business Administration (SBA), which administers the RRF, reported Wednesday that restaurants, bars, and other businesses providing on-site food and drink have submitted 266,000 applications seeking a total of $65 billion, far more than the $28.6 billion Congress allocated the program.

“The RRF was funded for $28.6 billion, so any additional funding requests over that amount will not be funded with the current appropriation,” SBA Public Affairs Officer Shannon Giles told the JofA in an email.  

Unless Congress passes legislation providing the RRF with fresh funding, the program looks certain to provide the vast majority of its funding to eligible businesses owned by women, veterans, and socially and economically disadvantaged individuals. The American Rescue Plan Act, P.L. 117-2, which created the RRF, mandated that those businesses, which have submitted 147,000 applications totaling $29 billion, receive priority review for the first 21 days of the program.

In addition to a $5 billion set-aside established by Congress for applicants with gross receipts not more than $500,000, the SBA created two additional funding allocations for the smallest restaurants and other eating establishments, such as food trucks and carts:

  • $500 million for applicants with 2019 gross receipts less than $50,000; and
  • $4 billion for applicants with 2019 gross receipts between $500,000 and $1.5 million.

In the first days of the RRF program, which opened May 3, the SBA received:

  • 13,114 applications from businesses with less than $50,000 in pre-pandemic revenue requesting $330 million in funds;
  • 100,410 applications from businesses with less than $500,000 in annual pre-pandemic revenue requesting $8.14 billion in funds; and
  • 61,535 applicants from businesses with between $500,000 and $1.5 million in annual pre-pandemic revenue requesting $15.1 billion in funds.

The SBA said it would keep the RRF application portal open because it still has potential funding available for eligible establishments with 2019 annual revenue of not more than $50,000. Eligible establishments that meet this revenue standard are encouraged to apply through SBA-recognized point-of-sale vendors or directly via the SBA online application portal.

Congress created the RRF to provide food and beverage providers with grants equal to their pandemic-related revenue loss, up to $10 million per business and no more than $5 million per physical location. The funds can be used for eligible expenses, such as payroll and rent.

Eligible entities for the RRF include the following:

  • 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.

AICPA members can access a detailed summary of the RRF.

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 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.

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.

Jeff Drew (Jeff.Drew@aicpa-cima.com) is a JofA senior editor.

SPONSORED REPORT

Get your clients ready for tax season

Upon its enactment in March, the American Rescue Plan Act (ARPA) introduced many new tax changes, some of which retroactively affected 2020 returns. Making the right moves now can help you mitigate any surprises heading into 2022.

100th ANNIVERSARY

Black CPA Centennial, 1921–2021

With 2021 marking the 100th anniversary of the first Black licensed CPA in the United States, a yearlong campaign kicked off to recognize the nation’s Black CPAs and encourage greater progress in diversity, inclusion, and equity in the CPA profession.