May 17, 2021

SBA Restaurant Revitalization Fund: The Ultimate Guide

Like other financial relief programs, time is of the essence. According to the NY Times, Patrick Kelley, who leads SBA’s Capital Access Office said the money “is probably not going to be enough funds, in all likelihood, for the demand that’s out there.” Therefore, if you run a food service business, you should familiarize yourself with the SBA Restaurant Revitalization Fund as soon as possible. To help you gain access to these funds, we’ve put together this helpful guide. In the sections below you’ll learn what the fund is, how it works, who’s eligible, and how to apply.

What is the SBA Restaurant Revitalization Fund?

According to the SBA, the fund provides emergency assistance for eligible restaurants, bars, and other qualifying businesses impacted by COVID-19. The SBA Restaurant Revitalization Fund (RRF) was created by Congress as part of the $1.9 trillion American Rescue Plan. The RRF sets aside $28.6 billion in federal aid for restaurants, bars, caterers and other food businesses. All of these funds will be allocated in the form of grants of up to $10 million per business.

Eligibility Requirements for RRF Funds

For the first 21 days, eligibility is restricted to food businesses with a majority of owners who are women, veterans, and socially or economically disadvantaged. To qualify as socially and economically disadvantaged, individuals must meet asset and income limits and be Black, Hispanic, Native American, Asian-Pacific American or South Asian American. Once the initial priority period is over, eligibility opens up to any food business. Check the SBA’s exhaustive list of eligible entities to ensure your business is eligible.

How to Apply for an RRF Loan

Unlike previous COVID-19-related relief programs, the RRF application process is fairly smooth. There are two ways to apply; the first is through an SBA-recognized Point of Sale (POS) vendor. This includes Square, Toast, Clover, NCR Corporation, and Oracle. If you aren’t already working with one of these vendors, you can apply through the SBA’s online portal. In addition to filling out an application, you’ll need several documents to complete your application. These documents include:
  • IRS Form 4506-T to verify your tax information.
  • Tax returns, bank statements, or profit and loss statements to verify your gross receipts.
The following types of companies will also need documentation to prove onsite sales to the public make up at least 33 percent of their gross receipts:
  • Brewpubs, taprooms, and breweries
  • Wineries, distilleries, and tasting rooms
  • Bakeries
Finally, inn owners will need documentation to prove their onsite food and beverage sales make up at least 33 percent of their gross receipts.

RRF Grant Amounts and Use of Funds

As mentioned earlier, the maximum RRF grant amount is $10 million. However, your potential grant amount is figured using one of three different calculations based on whether your business was operating:
  1. Before or on January 1st, 2019
  2. Partially through 2019
  3. Between January 1st, 2020 and March 10, 2021
You can find the detailed versions of the three calculations in the SBA’s RRF program guide on pages 6 through 9. If you run multiple locations that began operations in more than one of the periods listed above, you’ll need to use multiple calculations. Also keep in mind that in addition to the $10 million per applicant limit, there is a $5 million per location limit. As for use of funds, RRF grants are very flexible. You can use your grant money on any of the following expenses:
  1. Payroll costs
  2. Payments on business mortgage debts, other business debts, and/or business rent
  3. Utilities and maintenance
  4. Outdoor seating construction
  5. Business supplies
  6. Food and beverage expenses
  7. Covered supplier costs
  8. Operating expenses
You must use all your funds by March 11, 2023. If you don’t use all the funds on eligible expenses, you’ll need to return whatever funds you didn’t use.

Alternative Financing Options to RRF

Due to high demand, RRF funds will run out quickly. Unfortunately, that means many struggling food business owners won’t have access to much-needed funds. Yet while you might hold out hope that the RRF is replenished, it’s a good idea to consider your alternatives. Of course, many business owners want a free grant, but many financing options can work well for restauranteurs. In the chart below are several financing alternatives, along with free detailed breakdowns of each alternative’s pros and cons.
Financing Type Breakdown
Equipment loan Pros and Cons of Equipment Loans
Inventory loan Pros and Cons of Business Inventory Loans
Merchant cash advance Pros and Cons of a Merchant Cash Advance
Line of credit Pros and Cons of Receiving a Business Line of Credit
Commercial business loans Pros and Cons of Commercial Business Loans

Conclusion: Preparing for Recovery

Nothing has been easy about the COVID-19 pandemic. As restaurants start to open up, entrepreneurs will still have their hands full recovering. Funds from financing and grants can be a big part of expediting that recovery. Whether RRF runs out of funds or is replenished later remains to be seen. Our best advice is to hope for the best and prepare for the worst. That means you should submit your restaurant revitalization fund application to the SBA as soon as you’re eligible. Finally, if you don’t receive a grant, consider one of the options we laid out in the chart above, or click the link below for a free business financing quote from Fora Financial. New call-to-action