SBA Part Forty-Two: Important Information About The Restaurant Revitalization Fund Program
With the Small Business Administration (SBA) announcement late last week, during a Senate hearing on its intention to roll out the Restaurant Revitalization Fund (RRF) program, under the US Rescue Plan Act of 2021 (law), as soon as In early April, potential applicants are expected to start preparing for the application process.
I. Reminder of the RRF program
As we discussed in our previous article, this $ 28.6 billion RRF program will provide much-needed economic relief to restaurateurs who have been severely affected by government shutdown orders, social distancing requirements and limitations on operations and hours due to the pandemic of COVID-19. As a reminder: “eligible entities” can request a to agree for their “pandemic revenue loss,” up to a total of $ 10 million (including a cap of $ 5 million per physical location for entities with multiple locations). The grant amount is equal to the gross receipts of the applicant in 2019 minus (a) the gross receipts of the applicant in 2020 and (b) the amounts, if any, received for loans from the first and second draws of the Program of paycheck protection (PPP).
For example, suppose a restaurant’s gross revenue in 2019 was $ 12 million. Gross receipts for 2020 were $ 3 million and the two PPP loans were $ 2 million and $ 2.5 million. The applicant would be eligible for a grant of $ 4.5 million (12 – 3 – 2 – 2.5 = 4.5).
Most restaurants, food trucks, brasseries, caterers and bars will be considered “qualifying entities” as long as they (and their affiliates) have no more than 20 locations, are not listed on the stock exchange, and have not received from closed place. Subsidy to operators.
Also note, unlike the PPP loan program, RRF grants currently contain no restrictions on how funds are to be spent, meaning there is no 60% payroll requirement. This is a huge benefit for many restaurants who have found it difficult to pay rent and other costs under the P3 loan due to the requirement of salary expenses. SBA can change that once rule making begins, as they did with PPP, but since the goals of the programs are different, one would hope they didn’t.
II. Fund allocation
There has been some confusion over how the program money will be allocated.
First, under the law, $ 5 billion is set aside for small claimants (those with incomes in 2019 of less than $ 500,000) for 60 days from the date the law is signed (which brings us to 10 May 2021), or until a later date, the SBA sets its rules. We anticipate that the SBA will also impose a 60-day limit on this pool of funds from the date applications are opened. In other words, if the SBA opens applications on April 15, 2021, we expect that these funds will be set aside until June 14, 2021. If there is any money left in that $ 5 billion pool after that. on May 10, 2021 (or the later date set by the SBA) it will be added to the general pool for use by other applicants.
Second, under the Act, the remaining $ 23.6 billion will be available to all applicants. at once once the program is open. Any candidate above $ 500,000 in 2019 income will compete in this pool.
In addition, the law provided for a “preference period” for small businesses owned by women, ex-combatants and disadvantaged during the first 21 days of the pool of candidates opening. It is currently unclear whether this will exclude any other applicant from receiving funds during this 21-day period, but the legislation does not appear to indicate that will be the case.
III. Preparation of the application
Industry contacts were concerned that the grant application would require registration on SAM.gov, which takes time. However, on March 30, 2021, the SBA tweeted that would be to abandon this normal process. This is great news, as it will save restaurateurs hours that already need a break.
Before the start of the application, you can start gathering the documents proving your difference in income (i.e. tax returns, financial statements, etc.), as well as any loan documentation on PPP loans. that you have received. Additionally, you will likely need organizational documents from the company (Articles of Incorporation / Constituent Articles, Operating Agreements, etc.) to prove when you started your business. Having these documents on hand can facilitate a request.