The SBA Restaurant Revitalization Fund: what to know

The Small Business Administration’s (SBA) $28.6 billion Restaurant Revitalization Fund is part of the recently passed American Rescue Plan Act and is designed to provide federal aid to restaurants and bars that experienced pandemic-related revenue loss due to forced closures and crowd size restrictions.

The grant program aims to make restaurants whole for revenue losses incurred during the pandemic. The SBA has a series of calculations to determine how much each business should receive. 

The SBA began accepting applications on May 3. In the first week, the organization dispersed more than $2 billion in grants to 16,000 businesses. If you need assistance, it’s important to start the application process sooner rather than later to ensure you receive the funding. 

Note: The SBA will prioritize funding for women, veteran, and socially or economically disadvantaged business owners for the first 21 days the program is open. However, the organization encourages everyone to apply as soon as possible. After the first 21 days, eligible applicants will receive funding on a first-come, first-serve basis, regardless of when the SBA received the application.

Who is eligible to receive a Restaurant Revitalization Fund grant? 

Most independent restaurants in the US that experienced a loss in revenue in 2020 compared to their revenue in 2019 are eligible to apply for the grant program. The American Rescue Plan Act specifically lists the following types of food establishments that are considered eligible applicants: 

• Restaurants
• Food stands, trucks, and carts
• Catering companies
• Bars, lounges, taverns, inns, and saloons
• Breweries, wineries, and taprooms
• Any licensed alcohol producer where the public may taste or purchase products on location

Who is not eligible? 

Restaurants and bars that are either owned by a publicly-traded company or by the government are not eligible for the funding. If you are a restaurant owner with more than 20 locations, you are also not eligible.

However, if you own a franchise of a private restaurant group that has more than 20 locations, but you do not control them all, you are likely an eligible candidate. 

How do I apply for the Restaurant Revitalization Fund? 

You have two options to submit your application to the SBA. The first option is a new process that allows you to easily apply through your point-of-sale (POS) provider. Participating providers include Clover, NCR Corporation, Square, and Toast. If you use a POS partner to apply, you will receive assistance with documentation and an accelerated process. 

You can also apply directly to the SBA through their application portal. 

Regardless of the avenue you take to apply, you’ll need to collect information beforehand. If your establishment was open before 2020, you will need your: 

• Employer Identification Number, Social Security Number, or Individual Taxpayer Identification Number
• An address for yourself and anyone that owns more than 20% of your business

You will also need to submit: 

• PPP Loan amount you’ve received
• List of affiliated businesses, meaning any businesses you have an ownership interest of at least 50% 
• If you filed for bankruptcy: proof of your approved reorganization plan 
• Gross receipts documentation including business tax returns, IRS Forms 1040 Schedule C or F, partnership IRS Form 1065, financial statements like income or profit and loss statements, and IRS Form 1099-K, etc. 

How much can I receive from the Restaurant Revitalization Fund? 

The maximum grant size for businesses in operation for all of 2019 and 2020 is $5 million per business and $10 million per restaurant group. The minimum amount that will be dispersed is $1,000. 

The SBA will calculate grant amounts based on when you opened your business. Rough guidelines of what you can expect are:

If your business opened before 2019
(Dec. 31 2018 or earlier) 

Gather the following information if your establishment was in operation before 2019: 

• 2019 gross receipts
• 2020 gross receipts
• Any PPP loan amounts you received 

Subtract your 2020 gross receipts from your 2019 gross receipts. Then, subtract any PPP funding you received. Your expected grant should equal approximately that final amount.

If your business opened in 2019
(Jan. 1 2019-Dec. 31 2019) 

Gather the following information if you opened your business in 2019: 

• Total months of operation in 2019
• 2019 gross receipts
• 2020 gross receipts
• Any PPP loan amounts you received

Since you don’t have a full 12 months of 2019 gross receipts, you can calculate your average monthly gross receipts. Divide your 2019 gross receipts by the number of months you were open. Then, multiply that number by 12 to get your “annualized” gross receipts. 

Subtract your 2020 gross receipts from your 2019 annualized gross receipts, and subtract any PPP loan amounts from that number.  Your expected grant should equal approximately that final amount.

If your business opened after 2019
(Jan. 1 2020 or later)

If you opened after 2019, you have no prior year of gross receipts to compare your 2020 amount to. You’ll need to calculate your eligible expenses and gross receipts since you opened and prove that you operated at a loss to be eligible. 

If you need an idea of what the SBA considers eligible expenses, take a look at the list in the below section. 

To calculate your grant amount, subtract your gross receipts from the amount you spent on eligible expenses from February 15, 2020 and March 11, 2021. Then, subtract any PPP funds you received. Your expected grant should equal approximately that final amount.

What can I use the Restaurant Revitalization Fund grant for? 

You are only allowed to use the grant on specific expenses: 

• Payroll costs
• Mortgage and rent payments
• Utilities
• Maintenance, including outdoor dining modifications
• Supplies, including PPE and cleaning materials
• Food and beverage inventory
• Covered supplier costs
• Operational expenses
• Paid sick leave

You must incur the expenses paid for with the grant between February 15, 2020, to December 31, 2021.

It’s typical for government programs to change as time goes on, so keep an eye on the SBA’s Restaurant Revitalization Fund site for updates. We will also update you on our blog should any changes be made.