SBA To Enact Restaurant Revitalization Fund (“RRF”)
At Gettry Marcus CPA, P.C. we continue to stay up to date on the recent developments regarding the relief efforts put forth by Congress with respect to the COVID-19 pandemic. Recently, the SBA announced a new relief fund called the Restaurant Revitalization Fund (“RRF”), which will be available for certain business entities in the near future.
The RRF is a $28.6 billion dollar grant that provides funding for hard hit restaurants and bars. This fund is a component of the American Rescue Plan Act, which is a $1.9 trillion stimulus package signed into law by President Biden.
Summary of RRF Provisions
The SBA has yet to release detailed guidance regarding the RRF, but following is a summary of the provisions that were included as part of the American Rescue Plan Act:
- Eligible entities include restaurants, food stands/trucks, caterers, bars/taverns/inns, and brewpubs/tasting rooms, among others;
- Eligible entities must own/operate 20 or fewer establishments (with affiliates) regardless of ownership type and whether locations operate under the same/multiple names;
- Publicly-traded entities are ineligible;
- Applicants must certify to economic need;
- Applicants cannot receive both an RRF grant and a Shuttered Venue Operator grant.
- Applicant Calculation
- Applicants can receive a tax-free grant equal to the amount of pandemic related revenue loss by subtracting its 2020 gross receipts from its 2019 gross receipts;
- There are special rules for businesses not operating for the full year 2019, 2020 or 2021;
- Amounts are limited to $5 million per physical location, and $10 million per affiliated group;
- RRF grants are reduced by Paycheck Protection Program First Draw and Second Draw loans received.
- Eligible Uses
- RRF funds can be spent on payroll, principal & interest on mortgage obligations, rent, utilities, maintenance (including outdoor seating construction), personal protective equipment and cleaning materials, normal food and beverage inventory, certain covered supplier costs/operational expenses, paid sick leave and possibly other expenses determined by the SBA.
- Covered Period
- Eligible expenses must be incurred from February 15, 2020 to December 31, 2021;
- If a business permanently closes, or does not spend all of the funds, the remainder must be returned.
- Tax Treatment
- Grants are not taxed like income and all federal tax deductions are protected.
What Should be Completed Before the RRF Commences
Applicants should prepare relevant financial information now to show pandemic related revenue loss in 2020 vs. 2019.
Additionally, there are indications that in order for businesses to be eligible for an RRF grant they would need a DUNS (“Data Universal Numbering System”) and SAM (“System for Award Management”) number.
See the below link to set up your SAM account: