SBA Authorizes Restaurant Revitalization Fund

Registration begins Friday, April 30, 2021.

The United States Small Business Administration (SBA) has announced $28.6 billion (yes, billion with a B) to help restaurants keep their doors open. The aid essentially grants direct monetary relief to restaurants experiencing economic distress and significant operational losses due to the COVID-19 pandemic. The Restaurant Revitalization Fund has been established as a part of the American Rescue Plan.

The program will give restaurants funding equal to their pandemic-related revenue losses. Each establishment could be entitled to up to $10 million, but businesses with more than one location are limited to recovering no more than $5 million per location. Restaurant Revitalization Funds may be used for allowable expenses through March 11, 2023.

The grant program creates priority for restaurants owned by women, veterans, and individuals deemed “socially and economically disadvantaged.” For the first 21 days that the program is open, these classes of applicants will receive priority, but the SBA is encouraging all eligible applicants to submit applications as soon as the portal opens. Immediately following the 21-day preference period, all eligible applications will be funded on a first-come, first-served basis.

Registration and Application Dates

SBA Administrator Isabella Casillas Guzman announced that interested restaurants can begin the process by registering at restaurants.sba.gov starting Friday, April 30, 2021 at 9 a.m. Business owners must register before applying.

The application process will then open on Monday, May 3, 2021 at noon. Online applications will remain open to any eligible restaurant until all funds are allocated.

Qualified Businesses

Official guidance and a program guide are available on the SBA website along with a sample application. Eligible applicants include restaurants, food stands, food trucks, food carts, caterers, bars, and snack bars. Also included are bakeries, brewpubs, tasting rooms, taprooms, breweries and/or microbreweries, wineries, and distilleries where onsite sales to the public comprise at least 33% of gross receipts. 

Application Requirements

Documentation required for application includes an IRS Form 4506-T, completed and signed by the applicant, documentation of gross receipts and eligible expenses through tax returns for the business (IRS Form 1120 or IRS 1120-S or IRS Forms 1040 Schedule C or IRS Forms 1040 Schedule F or a partnership’s IRS Form 1065 including its K-1s), bank statements, financial statements (such as income statements or profit and loss statements), and point of sale reports, including IRS Form 1099-K.

Applications for a brewpub, tasting room, taproom, brewery, winery, distillery, or bakery must also include documents proving that onsite sales to the public comprised at least 33.00% of their gross receipts in 2019. For businesses that opened in 2020, the original business model for the establishment must have contemplated at least 33.00% of gross receipts in onsite sales to the public.

Available Funds

The SBA has set aside funds for distribution. $5 billion has been earmarked for applicants with 2019 gross receipts of no more than $500,000. An additional $4 billion has been earmarked for applicants with 2019 gross receipts from $500,001 to $1,500,000. Finally, $500 million has been earmarked for applicants with 2019 gross receipts of not more than $50,000. However, the SBA has reserved the right to reallocate these set-asides.

For establishments open prior to or on January 1, 2019, the reimbursement is calculated as the 2019 gross receipts, minus 2020 gross receipts, and minus any PPP loan amounts. For establishments that began operations partially through 2019, the reimbursement is calculated as the average 2019 monthly gross receipts x 12 minus 2020 gross receipts, minus any PPP loan amounts. For establishments that began operations on or between January 1, 2020, and March 10, 2021, and for any establishments not yet opened but which have incurred eligible expenses, the reimbursement is calculated as the amount spent on “eligible expenses” between February 15, 2020, and March 11, 2021, minus 2020 gross receipts, minus 2021 gross receipts (through March 11, 2021), and minus any PPP loan amounts.

Pittsburgh Corporate Attorneys

Jacquelyn Core is an experienced member and Co-Chair of The Lynch Law Group’s Corporate Practice. Jacquelyn focuses on representing small, medium, and large enterprises in complex commercial transactions, including mergers and acquisitions. She also serves as fractional in-house counsel and assists businesses with contracts and compliance.

Jacquelyn is available to help establishments navigate application for Restaurant Revitalization Funds. She can also provide consultations to structure, negotiate, and close deals in the COVID-19 environment and beyond, as well as to assist with corporate restructurings and other business needs.

Please call (724) 776-8000 or email her directly at jcore@lynchlaw-group.com to schedule a time to discuss your business needs.

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