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Our attorneys stay on top of changes in legislation, agency regulations, case law, and industry trends—then craft timely legal alerts to keep clients up to date on legal developments important to their business.

April 23, 2021

Restaurant Revitalization Funds: How to Be Prepared

The Small Business Association (SBA) recently provided guidance on the application requirements and eligibility criteria for the Restaurant Revitalization Fund (RFF), a $28.6 billion program established by the American Rescue Plan Act of 2021 to provide support to eligible entities that suffered revenue losses related to the COVID-19 pandemic. The RFF will provide eligible entities with funding equal to their pandemic-related revenue loss up to $10 million per business and affiliated businesses and no more than $5 million per physical location. Recipients are not required to repay the funds as long as they are used for eligible purposes by March 11, 2023. 

Eligible entities to receive RRF funds are those that serve food or drink, including restaurants, food stands, food trucks, food carts, caterers, bars, saloons, lounges, taverns, breweries, and wineries, to name a few. Certain eligible entities, such as breweries and wineries, must provide documentation that they had at least 33 percent of gross receipts in 2019 for on-site food or drink sales to the public. Other eligible entities, such as bars and restaurants, are presumed to have on-site sales to the public comprising at least 33 percent of gross receipts in 2019. Importantly, eligible entities do not relinquish their eligibility if they have already received a Paycheck Protection Program (PPP) loan. Nevertheless, receipt of a prior PPP loan will be factored into consideration when calculating an applicant’s funding amount.

Eligible entities may use the funds to cover, among other things, business payroll costs, including sick leave and costs related to the continuation of group benefit plans; payments on any business mortgage obligation; business rent payments; debt and utility payments; business maintenance expenses; business food and beverage expenses, including raw materials for beer, wine, or spirits; covered supplier costs; and business operating expenses incurred through normal operations.

Eligible entities may apply for RFF funds through a recognized SBA Restaurant Partner; through SBA directly, at restaurants.sba.gov, using the online application portal when it becomes available; or by telephone, at (844) 279-8898.  

To be prepared for the application process, eligible entities should have the following items at the ready:

  • SBA Form 3172, which can be completed digitally on the SBA platform
  • IRS Form 4506-T, which can also be completed digitally on the SBA platform
  • Gross receipt documentation for 2019 and 2020, such as business tax returns (IRS Form 1120 or IRS 1120-S); bank statements; or financial records 

The SBA will prioritize distributing funds to small businesses that are at least 51 percent owned and controlled by women, veterans, and socially and economically disadvantaged individuals. Therefore, during the first 21 days of the program, the SBA will distribute funds only for approved applications where the applicant qualifies under a prioritized group. Nevertheless, during this period, the SBA will accept applications from all eligible applicants. Thus, we recommend submitting a complete application as soon as the portal opens.

Barclay Damon’s Hotels, Hospitalities, & Food Service Team is available to assist with the application process. For more detailed guidance on the RRF, see the SBA’s cross-program eligibility on SBA COVID-19 relief options table and restaurant revitalization funding program guide

If you have questions regarding the content of this alert, please contact Mark Whitford, partner, at mwhitford@barclaydamon.com; Matthew Paris, associate, at mparis@barclaydamon.com; Scott Rogoff, Hotels, Hospitality & Food Service Team leader, at srogoff@barclaydamon.com; or another member of the firm’s Hotels, Hospitality & Food Service Team. 

We also have a specific team of Barclay Damon attorneys who are actively working on assessing regulatory, legislative, and other governmental updates related to COVID-19 and who are prepared to assist clients. Please contact Yvonne Hennessey, COVID-19 Response Team leader, at yhennessey@barclaydamon.com or any member of the COVID-19 Response Team at COVID-19ResponseTeam@barclaydamon.com.


 

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