Five things you need to know about the SBA’s $28.6 billion Restaurant Revitalization Fund
This new federal program targets small businesses in the food and beverage industry hit by the pandemic and prioritizes historically-underserved communities. Have you checked if you can apply?
The American Rescue Plan Act (ARPA) approved by Congress in early March brought specific financial relief for food businesses looking to get back on their feet, as many cities that underwent lockdowns in 2020 are planning for a full reopening this year, setting the scene for the recovery of this industry.
ARPA assigned $28.6 billion to create the Restaurant Revitalization Fund (RRF), a new grant program administered by the U.S. Small Business Administration (SBA), and that is currently receiving applications.
Since May 3, when the program was officially launched, the SBA has received more than 186,000 requests from restaurants and other food and beverage businesses in all 50 states, according to the SBA.
More than half of them came from underserved business communities, who have a special priority window to apply — including but not limited to Latino-, Black- and women-owned businesses.
If you are a small business owner in this industry and are in need of additional capital for your growth plans, the RRF could be the help you were expecting. But how does it work and how can it benefit you?
Who is eligible and who is not?
Small businesses in the food and beverage industry hit the by the pandemic that need support for ongoing or anticipated operations: restaurants, food stands, food trucks, food carts, caterers, bars, coffee shops, etc. Additionally, bakeries, breweries, wineries and inns can also apply, as long as their onsite sales of food or beverage comprise at least 33% of gross receipts.
If you filed for bankruptcy, you will be eligible if you are operating under either a Chapter 11, 12 or 13, with an approved reorganization plan. Temporarily closed businesses due to state or local restrictions, or that have recently re-opened also qualify.
State and local-government businesses, as well as non-profit organizations are not eligible. You will not qualify if you own or operate more than 20 locations as of March 13, 2020, if you are a publicly-traded company, or if you have permanently closed.
The funds are given as grants, which means they will not be returned to the government if you meet certain usability conditions. There is a cap of $10 million per business and $5 million per physical location.
The funds must be used to cover payroll costs, as well as any other maintenance, supply and core-operational expenses (utility services, insurance, licenses, mortgage obligations, etc.).
You will be able to finance expenses incurred between February 15, 2020 and March 11, 2023, which is the deadline to spend all granted funds. If you have unused funds by that date, they must be returned to the government.
During the first 21 days from the program launch — from May 3 until the 24 — the SBA will only process grants to qualifying businesses owned by women, veterans and socially and economically disadvantaged applicants.
It applies to individuals who have been subjected to racial or ethnic prejudice or cultural bias because of their identity, and whose ability to compete has been impaired due to less access to capital or credit opportunities in comparison to others in the same business area who are not socially disadvantaged.
On May 25, all other eligible applications will be processed and funded until the total $28.6 billion are exhausted. From that amount, $9.5 billion have been set aside for the smallest restaurants and bars with gross receipts between $500,000 and $1.5 million in 2019, including millions of dollars for those with under revenue under $50,000 in that year.
Estimated time between processing until distribution is an average of 14 days, according to the SBA. But then, again, only the prioritized groups will receive funding during the first 21 days.
Yes, there are two extra things to keep in mind. After the usage period ends in March 2023, businesses will be required to undergo a Use of Funds Assessment, which entails providing a detailed expenditure report and certification for that period. Additionally, until that assessment is completed, grantees will be required to provide self-reported unaudited data on funds usage, beginning December 2021 and each year throughout 2023.
To check for the documentation and other additional information to apply for the program, the SBA has enabled two application portals, one in English (restaurants.sba.gov) and another one in Spanish (sba.gov/restaurantes).
Ahead of the RRF’s launch, the SBA Administrator Isabella Casillas Guzman said in a meeting organized by the U.S. Hispanic Chamber of Commerce that the online application will be available in other seven languages, with over-the-phone support in 17 languages. The SBA will also be working with point-of-sale vendors in different cities across the country.