How to Take Full Advantage of the Restaurant Revitalization Fund

  • Restaurant Revitalization Fund grants are capped at $10 million and limited to $5 million per location for multiunit restaurant companies.
  • RRF funds can be used for payroll, utilities, maintenance, supplies, operating expenses, covered supplier costs, food and beverage inventory and other needs specified by law.

Update: After press time for this article, the Small Business Administration announced it will begin accepting Restaurant Revitalization Fund applications on Monday, May 3.

By Michael Rasmussen

Q: What do I need to know about the Restaurant Revitalization Fund?

A: It is now more important than ever to set aside some time, get on the phone or a Zoom call with your accountant and discuss your financials thoroughly. You need to make sure you take advantage of every program the federal government and Small Business Administration (SBA) have been offering since the pandemic started in March 2020. As you’re reading this article, you know your personal tax returns are due on May 15. So, once you have your accountant’s attention, it’s time to rattle some cages!

The American Rescue Plan Act (ARPA) created the Restaurant Revitalization Fund (RRF) to provide restaurants with grant funds equal to the restaurant’s pandemic-related revenue losses. Restaurants and bars have been among the hardest-hit businesses during the COVID-19 pandemic, and members of the U.S. Senate’s Small Business Committee have pushed for answers on how quickly the program can be launched. We know that, during the first 21 days of the program, the SBA will prioritize applications from restaurants owned, operated or controlled by women, veterans or socially and economically disadvantaged individuals. However, as of press time, there has been minimal guidance from the SBA as to how and when business owners can apply.

Related: How to get a jumpstart on your RRF application

But here’s what we know right now. The ARPA provides $28.6 billion in grants to be administered by the SBA. An RRF grant amount is based on 2019 gross receipts less 2020 gross receipts. The grants are capped at $10 million and limited to $5 million per location for multiunit restaurant companies. The law contains provisions for those businesses not in operation through all of 2019, opened after January 1, 2020, or not open yet. The grant will be reduced by any PPP loan you’ve already received. 

Approved grants must be used to support the business’s ongoing operations. Eligible entities include restaurants, food stands, food trucks, food carts, caterers, saloons, inns, taverns, bars, lounges, brewpubs, tasting rooms, taprooms and similar venues. Publicly traded restaurants with more than 20 locations will not be eligible for grants, nor will those that have received a Shuttered Venue Operators Grant (SVOG).

The Restaurant Revitalization Fund (RRF) can provide relief for owners who have spent money to try to open a restaurant and want to recover some costs toward a future opening. However, the RRF does not permit businesses to use the funds to open a second location. If restaurants do not use all the funding for the eligible expenses before the end of the covered period, those funds must be returned to the government.

It is critical to understand that these funds are to be used for specific costs to keep the business operating. The goal is to recover lost revenue resulting from the pandemic and to ensure the restaurant survives through the pandemic’s financial burdens. Specifically, the funds can be used for payroll, utilities, supplies, operating expenses, covered supplier costs, food and beverage inventory, maintenance expenses (including construction to accommodate outdoor seating and walls, deck surfaces, furniture, fixtures and equipment), and any other expenses the SBA determines to be essential to maintaining the eligible business.

I encourage restaurants to protect and prioritize their employees and allocate as much funding as possible to payroll and related benefits.

As owners prepare to receive news about their fund eligibility and distribution, they should look over their financial statements and future projections. It is essential that businesses gather all evidence of their gross receipts and calculate the reduction of the gross revenue received in 2020 compared to 2019. Be aware that gross receipts include all revenue and PPP funds.

Lastly, restaurants should project their eligible expenses for the covered period—February 15, 2020, through December 31, 2021—and allocate the costs among any other funds they have received through the PPP or Employee Retention Tax Credit (ERTC). Get your accountant involved to help you understand how all of those programs have impacted your financials.

The grant program covers the period of February 15, 2020, through December 31, 2021, or a date to be determined by the SBA that is not later than two years after the date of enactment of this section of the law.

If funds are not used on allowable expenses or if the business “permanently ceases operations” before the end of the covered period, the funds not used for allowable expenses must be returned!

I urge you to take this article and read it to your accountant. Understand all of the abbreviations (such as SVOG, PPP or ERTC) and pinpoint how each of them might have impacted your financial situation in 2020 or 2021.  This is a very complex area with many moving parts, so be kind to your advisor, but take my advice! Get informed. Do not go off on a vacation this summer when you could be busier than you have ever been coming out of this pandemic, only to later learn about the programs, monies, grants, credits or strategies that your peers took advantage of!