Restaurant Revitalization Fund Application Process and Guidelines Update

attorney Barry Kurtz

Barry Kurtz | Shareholder

April 23, 2021

The Small Business Administration (SBA) released key details on application requirements (RRF Application), eligibility and a program guide (RRF Program Guide) for the Restaurant Revitalization Fund (RRF) on April 19, 2021. The RRF provides financial relief for eligible restaurants and related food and beverage service businesses with $28.6 billion of tax-free federal grants if their revenue in 2020 was less than their revenue in 2019. The SBA is the administrator of the RRF.

The SBA will test a seven-day pilot program for the RRF application portal. Following the pilot program, the application portal will be opened to the public. During the first 21 days of the program, priority will be given to eligible small businesses owned and controlled by women, small businesses owned and controlled by veterans, and socially and economically disadvantaged small businesses. Following the 21-day period, all eligible applicants may apply.

Who is Eligible?

Restaurants, food stands, food trucks, food carts, caterers, saloons, inns, taverns, bars, lounges, bakeries, brewpubs, tasting rooms and taprooms that earned at least a third of their revenues from the sale of food and beverages consumed on site; licensed facilities or premises of beverage alcohol producers where the public may taste, sample, or purchase products; and other similar places of business in which the public or patrons assemble for the primary purpose of being served food or alcohol, will be eligible for grant proceeds. Franchisees of franchise systems with more than 20 units are eligible if their franchisors are listed on the SBA Franchise Directory.

Businesses not eligible for RRF relief include those that have permanently closed and those operating under bankruptcy protection without a submitted or approved plan of reorganization, state and local government-owned establishments, publicly traded companies, businesses with more than 20 locations (including affiliates) as of March 13, 2020, and businesses that received grants under the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act.

What Are the Grant Limits?

The maximum grant will be the average monthly gross receipts in 2020 less the average monthly gross receipts in 2019 for businesses not in operation for all of 2019. Businesses not in operation for all of 2020 could potentially receive a grant equal to the amount of eligible expenses invested in the business to date.

Grants cannot exceed $10 million per entity or $5 million per location and will be reduced by amounts previously received under the Paycheck Protection and Economic Injury Disaster Loan programs.

How Long Will Funds be Available?

The RRF will operate on a first-come, first-served basis and it is likely that the funds will be depleted quickly. Consequently, eligible business owners should complete their applications and gather the required documentation for the SBA quickly after the seven-day pilot program is completed.

According to the SBA’s April 19th release, the SBA is “focused on ensuring that the RRF program’s application process is streamlined and free of burdensome, bureaucratic hurdles – while still maintaining robust oversight”. We’ll see.

Contact any member of our Franchise & Distribution Practice Group listed above for further information or counsel regarding the application process.

Barry Kurtz is the Chair of our Franchise & Distribution Practice Group.

This information provides an overview of a specific developing situation. It is not intended to be, and should not be construed as, legal advice for any particular fact or situation.

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