Restaurant Revitalization Grants Now Available—Are You Eligible?
On March 11, 2021, President Biden signed the $1.9 trillion American Rescue Plan, which included an expansive grant funding pool of $28.6 billion—grants, not loans—to cover pandemic losses for restaurants, bars, bakeries, wine venues, caterers, food trucks and other F&B operators. This week, the Small Business Administration released its first guidance on how these Restaurant Revitalization Fund (RRF) grants will be allocated.
Given the very specific eligibility parameters for RRF grants, most parks and attractions may not be able to take advantage of these grants, but some could be eligible or may have peripheral F&B holdings that can take advantage of the program. Additionally, some operators may have stand-alone F&B operators or catering groups who could benefit, and if so, these RRF grants can become important to create stability for those operators in your parks.
There are other limitations with these RRF grants, including the requirement to deduct PPP loans from the total eligibility amount. However, along with PPP loans, these RRF grants are unprecedented, and businesses likely will not see this level of direct federal aid in their lifetimes. If you meet the eligibility requirements below, it is worth looking into this RRF program and determine how your local F&B operations may benefit. The 21 pages of the SBA’s RRF grant guidance, along with application forms, can be found at this link: https://www.sba.gov/funding-programs/loans/covid-19-relief-options/restaurant-revitalization-fund.
Who is Eligible: Generally, the SBA allows a broad list of food and beverage operations to apply, including restaurants, bakeries, food trucks, food stands, snack bars, food carts, caterers, saloons, inn, bars, taverns, brewpubs, wine tasting venues, distilleries—but there are some key caveats that impact industry businesses’ F&B operations. There is a statutory requirement that states a venue must be a “place of business in which the public or patrons assemble for the primary purpose of being served food or drink.” At the same time, the entity’s F&B revenues must be a least 33 percent of overall on-site gross receipts to the public in 2019.
Amount of Grants: Individual venues can apply for grants up to $5 million.
Calculating Grant Size: The grants are targeted to “pandemic-related loss.” In short, a venue subtracts their 2020 gross receipts from 2019 receipts, to come up with a grant number, capped at $5 million. There are some variations on this depending on how long a F&B operation is or was open during the pandemic. Visit the SBA link above for details.
Time Period for Use of Grants: Entities can use grant funds to pay for eligible expenses until March 2023.
Application Deadline: Unlike PPP loans, where businesses must apply by May 31, 2021, the RRF grants have no deadline for application. Importantly, though, it is first-come, first-served. Money is anticipated to go quickly. Eligible entities should get their documentation ready now, and apply when the full fund opens to the public in late May.
What about F&B at an FEC or other attraction: The RRF grant program overview was released April 17, 2021, but as the program overview stands now, if food and beverage operations are inclusive with entities total receipts and revenues—meaning it is not a separate business with its own Tax Identification Number or Employee Identification Number apart from the broader business—it does not look like such F&B operations will be eligible for RRF grants. The SBA gives the following example: “Eligible entities include [F&B operations] located in an airport terminal or that operate independently (i.e., has its own tax identification number) inside another business (e.g., a restaurant that operates independently inside a hotel or conference center).”
Thus, if an FEC, park or attraction lumps receipts and revenue under one company-wide TIN or EIN, like a food court or a food cart, unless those revenues are 33% of total gross receipts for a combined corporate entity, those venues or operations are not eligible for RRF grants.
However, if in you have a separate food outlet like an ice cream store, coffee shop, upscale restaurant, or a food truck, etc., those could be eligible for RRF grants with their own TIN or EIN. It is worth checking this with your CFO or accountant about how you structure your F&B operations.
Which Venues are Not Eligible:
- Operated by state or local governments
- Non-profit organizations
- Publicly traded companies (except for franchisees under 20 locations)
- Permanently closed establishments
- Restaurants located within hotels without their own Employee Identification number
- In Chapter 7, 11, 12, 13 bankruptcy and not in current operation
- If the establishment is part of more than 20 locations, regardless of name
- If a business has received a federal Shuttered Venues Operator Grant
Application: Easy, most venues will not even need an accountant to apply; see the SBA link above with application examples.
Priority Applications: For the first 21 days of the SBA application portal will prioritize those venues operated by a majority of ownership of women, veterans, or people from economically and socially disadvantages groups (Blacks, Latinx, Tribal, Asian, e.g.) but these categories require a majority (at least 51 percent) ownership stake or control;
Establishing Need for RRF Grant: Eligible venues must certify (attest on a form) that “current economic uncertainty makes this funding request necessary to support the ongoing or anticipated operations.” While significant progress has been made on vaccine distribution—to date 26 percent of all Americans have received both shots—it remains unclear if or how variants or the vaccines will be able to allow for re-opening the economy. And if enough of the adult population declines to be vaccinated, that could prevent herd immunity necessary for returning to more normalized economic circumstances.
How Can RRF Grants Be Spent: The list of eligible expenses is quite broad given the enormity of economic damages to restaurants, and more flexible than PPP loan money. Like PPP loans, RRF grants can be used for payroll (including health, vision, dental), rent, and all utilities but also mortgages (principal and interest), outdoor dining operations, propane for food trucks, insurance for F&B vehicles, existing credit card debt, inventory, licenses, equipment, property taxes, and purchase order supplies. Unlike PPP loans, the RRF grants can be used to pay mortgage, not just interest as with PPP loans. Grants cannot be spent on expansions of new operations.
Interplay between RRF Grants and PPP Loans: Most restaurants and bars and other F&B outlets likely received PPP loans, which must be deducted from the maximum $5 million grant levels. Still, do the math. The flexibility on how to use these grants is far better than PPP loans, and extends all the way into 2023.
Downsides to these Grants: Grants could go fast, and smaller venue owners may overlook this great opportunity. Because mid-size franchisees are eligible, small venue owners could be competing with the family who owns 13 McDonalds in the region. Also, if your business has an outstanding PPP loan application pending, to apply for RRF grants, you must withdraw that PPP loan application. If you are a FEC with F&B over 33% or park or attraction with independent F&B operators or concessions, it is worth your while to educate yourself or these smaller operators and encourage them to apply early.