Did you know there’s a Restaurant Revitalization Fund, which is a fund available for restaurants, bars, and other eating establishments affected by the COVID-19 pandemic?
It’s no secret that restaurants and bars have been hit the hardest by the pandemic. Statistics show that over 110,000 restaurants closed last year, overall revenue from the industry dropped over $240 billion, and millions of jobs were erased in the process. “Satellite businesses,” such as restaurants with a customer base made up of employees on their lunch breaks from nearby offices, were hit particularly hard.
Additionally, many of the restaurants that survived are still only operating at 50% capacity, even in areas that have seen steady recovery. Many people are still afraid to go out to eat, and on top of everything else, food costs are going up due to factors like inflation and the impact the pandemic has had on logistics. It’s been a long and difficult year, but as we begin our return to normalcy, there’s no shortage of support programs out there, and the Restaurant Revitalization Fund is one of them. That being said, if you want to take advantage of it, you’ll have to act fast.
What is the Restaurant Revitalization Fund?
A few weeks ago, I discussed the Employee Retention Credit, an element of the recently-passed American Rescue Plan. The Restaurant Revitalization Fund (RRF) is another part of that plan, and as its name suggests, it’s specifically designed to help eating establishments keep their doors open during the pandemic.
Under the RRF, restaurants that successfully apply will be entitled to funding equal to pandemic-related revenue losses up to $10 MILLION dollars, with no more than $5 million dollars per location. This can generate huge payouts for businesses that take advantage of this opportunity. Recently, I helped one of my clients—the owner of a small restaurant—take advantage of this fund, and they were able to receive over $136,000. If you’re a restaurant owner who was hit particularly hard by the pandemic, this is the real deal.
How do I Apply for the Restaurant Revitalization Fund?
The first step for putting in your application is visiting the website for the Small Business Administration: https://www.sba.gov. At the time of writing, COVID-19 relief options are on the very front page. Click the link, and from there, the Restaurant Revitalization Fund will be one of the first few options you see. Clicking on it will provide further information and give you the option to apply.
Eligible businesses include restaurants, bars, food trucks, food stands, bars, saloons, lounges, taverns, snacks & non-alcoholic beverage bars (such as coffee shops), brew pubs, tasting rooms, tap rooms, breweries, microbreweries, inns, bakeries, and others that incurred pandemic-related losses in 2020. Please note, however, that at least 33% of food and beverage sales need to be on-site in order to qualify.
You will have to fill out and submit a number of forms as well, including a few specifically from the IRS. Make sure you have these forms ready when you go to apply. These forms are listed below:
- 4506-T Request of Transcript (This is to help prevent fraud)
- Gross Receipts documentation (more or less of your choosing)
- 1040 Schedule-C (or Schedule-F if you run a farm),
- 1065 Schedule K1 Return of Partnership
- Bank Statements
- Corporate Returns (if applicable)
- Externally or Internally-Prepared Financial Statements
- Point-of-Sale Forms, Including Form 1099-K
Registration for the Restaurant Revitalization Fund opened up on May 3rd, so it’s still relatively early in the process. That being said, keep in mind that under special provisions of the RRF, during the first three weeks, only “priority groups” are allowed to apply, meaning that for a limited time, the benefits are only open to “women, veterans, or socially and economically disadvantaged individuals” who own small businesses. If you belong to one of these groups, act as soon as possible while this period lasts. If you don’t, take this time to get all of your forms in order to make the process smoother when applications are open to you. In any case, please note that it’s highly advisable to have your tax return for last year finished.
What Else is There to Know About the Restaurant Revitalization Fund?
There are a number of smaller details that go into the Restaurant Revitalization Fund, all of which are good to know. More fully-detailed breakdowns can be found directly on the SBA site, but for convenience, I’ll list some of the more notable details here.
One major element of the RRF is that the funds you receive need to be spend for “eligible purposes,” which include:
- Business Payroll Costs
- Paid Sick Leave
- Business mortgage
- Business rent
- Business debt service (both principal and interest),
- Utility payments,
- Maintenance payments,
- Construction of outdoor seating,
- Business Supplies (various materials, including PPE)
- Business Operating Expenses
These provide excellent opportunities to make use of the funds you receive. However, keep in mind that the deadline for spending the funds is March 11th, 2023. In that time, you’re virtually guaranteed to spend that money on everything you need, and you won’t have to pay any of it back.
You also need to keep in mind that your funds are calculated through your gross receipts, which essentially means the money you made from sales without PPP loans. If you have received a PPP loan previously, this is something to consider. Thankfully, the SBA site will help you walk through all of the math, and when you plug in the numbers you need, the site will calculate everything for you. With that being said, it would be best to consult a third-party CPA to look everything over before you crunch the numbers.
It goes without saying that if you own an eating establishment, you’ll want to take advantage of the Restaurant Revitalization Fund as soon as possible. Check out the SBA website, make sure all of your documents are in order, and apply for the funds the moment you’re able to do so. As we discussed already, there’s potential for absolutely massive payouts, and if your restaurant was hit particularly hard by the pandemic, this could be another great opportunity to get back on your feet. Stay healthy, stay safe, and as I always say, “Let’s make this our most profitable year ever!”