The food and beverage industry gained additional financial relief with President Biden’s American Rescue Plan Act (ARPA), which introduced a $28.6 billion Restaurant Revitalization Fund (RRF) through the U.S. Small Business Administration (SBA). With the registration portal opening on Fri., April 30, the SBA will begin accepting applications at noon on Mon, May 3.

Doeren Mayhew’s tax advisors highlight the new relief fund, including who is eligible, which expenses they can use with the grant, application details and more.

The Grant

Eligible restaurants stand to receive a tax-free federal grant in the amount of its pandemic-related revenue loss, which is calculated by subtracting 2020 gross receipts from 2019 gross receipts. Keep in mind, when analyzing 2020 gross receipts, amounts received from any Paycheck Protection Program (PPP) loans, SBA Section 1112 payments, or from any SBA Economic Injury Disaster Loan (EIDL), EIDL advance, targeted EIDL advance, or other state and local small business grants should not be included.

Here are a few applicable calculations for unique situations:

  • Businesses not in operation all of 2019 may use the formula of 12 times the average monthly gross receipts in 2019 and the average monthly gross receipts in 2020 (or a formula provided by the SBA).
  • Businesses not in operation until 2020 are eligible for a grant in the amount of their “eligible expenses” subtracted by gross receipts received (or a formula provided by the SBA).
  • Businesses not yet in operation as of the application date but have “eligible expenses” would receive a grant in the amount of those expenses (or a formula provided by the SBA).

The SBA has $23.6 billion available to be awarded to businesses of differing sizes based on their annual gross receipts, and $5 billion is available to be awarded to businesses with gross receipts less than $500,000 in 2019. The SBA can adjust the amount awarded to businesses based on demand and “relative local costs” of the markets in which RRF-eligible businesses operate. The maximum grant amount a business could be awarded is $10 million and is limited to $5 million per physical location of a business.

Which Businesses Qualify?

Eligible entities include privately owned businesses not permanently closed and include businesses where the public or patrons gather for the primary purpose of being served food or beverages. To qualify for an RRF, an entity must own or operate 20 or fewer establishments (along with any affiliated businesses), despite its ownership type of the locations, as well as if these locations do business under the same name or multiple, as of March 13, 2020. Affiliated businesses have a right to profit distribution of 50% or more, or have contractual authority to control the business’s direction, given such affiliation “shall be determined as of any arrangements or agreements in existence as of March 13, 2020.”

Qualifying businesses include:

  • Restaurants
  • Food stands/food trucks/food carts
  • Caterers
  • Saloons, taverns, bars, lounges, inns, brewpubs, tasting rooms and taprooms
  • Licensed facilities or premises of an alcoholic beverage producers of which patrons gather primarily to be served food or drink
  • Snack and nonalcoholic beverage bars

The following businesses also qualify for the RRF; however, they must demonstrate that onsite sales to the public comprise at least 33% of gross receipts:

  • Bakeries
  • Brewpubs, tasting rooms, taprooms
  • Wineries and distilleries
  • Inns

Eligible Expenses

Grant recipients may use funds for the following expenses during their covered period:

  • Payroll costs, including paid sick leave and costs related to the continuation of group medical benefits
  • Mortgage obligations/rent, including rent under a lease agreement
  • Debt services
  • Utilities and typical operating expenses
  • Maintenance, such as creating outdoor dining options
  • Food and beverage expenses, including raw materials for beer, wine or spirits
  • Supplies to combat the spread of COVID-19, including cleaning materials, personal protective equipment (PPE) and more
  • Specific supplier costs
  • Operational expenses, which is defined as business expenses incurred through normal business operations necessary and mandatory for the business.

Past-due expenses are also eligible if they were incurred between Feb. 15, 2020 and March 11, 2023.

Timing of Using Funds

All applicants must use their awarded funds by March 11, 2023. Applicants will be required to report how much of their award has been used against each eligible use category by Dec. 31, 2021.

If the grant has been fully expended prior to Dec. 31, 2021, the SBA will ask the applicant to certify that proceeds have been used on eligible expenses. Grant recipients who do not fully expend their award funds prior to Dec. 31, 2021, will be required to complete annual reporting submissions until the award has been fully expended or the period of performance expires.

Application Details and Required Documentation

Based on the sample application provided by the SBA, applicants will be required to disclose ownership information for all owners with 20% or more equity as well as affiliate information. If no owner has at least 20% ownership of the business, the applicant must list enough owners whose combined equity represents at least 20% of the business’s ownership. Applicants should also have all information related to their PPP loans received in 2020 or 2021, as they will be required to disclose the amount received.

Applicants should also have the following documentation prepared:

  • IRS Form 4506-T, completed and signed by the applicant.
  • Any of the following documents demonstrating gross receipts:
    • Applicants that were in operation prior to or on Jan. 1, 2019, must supply documentation of gross receipts for 2019 and 2020.
    • Applicants that began operations partially through 2019, must supply documentation of gross receipts for 2019 and 2020.
    • Applicants that began operations on or between Jan. 1, 2020, through March 10, 2021, AND applicants that have not yet opened but as of March 11, 2021, but have incurred eligible expenses, must supply documentation of gross receipts and eligible expenses for the length of time in operations.

As referenced above, bakeries, breweries, brewpubs, tasting rooms, taprooms, wineries, distilleries or inns must provide documentation with their application proving that onsite sales to the public comprised of at least 33% of gross receipts in 2019. For these types of businesses that opened in 2020 or are not yet opened, the applicant’s original business model should have contemplated at least 33% of gross receipts in onsite sales to the public. Onsite sales include food and/or beverage consumed on the applicant’s premise, purchased to-go, purchased online and picked up, or delivered directly to the consumer for use.

Acceptable documentation of gross receipts and eligible expenses include:

  • Business tax returns
  • IRS forms 1040 Schedule C or Schedule F
  • For a partnership: partnership’s IRS Form 1065 (including K-1s)
  • Bank statements
  • Externally or internally prepared financial statements
  • Point of sales reports, including IRS Form 1099-K

How to Apply

Businesses wanting to apply for the RRF may use one of these three options:

  1. Through SBA Restaurant Partners. Businesses currently using one of the SBA’s Restaurant Partners can apply through their website or secure portal. The SBA encourages applicants using its partners to apply through their customized process, as it will save time in preparing and processing the application.
  2. Directly through the SBA. To apply directly with the SBA, visit Once the application and supporting documentation is submitted, the SBA begin its application review, which takes approximately 14 days to determine approval.
  3. Via phone. To apply telephonically, call 844.279.8898 to complete the application questionnaire and attestations with a support agent. The completed application and signature documents will then be mailed to the applicant, where they will be responsible for fully executing and notarizing the application before returning it the SBA. Once the application and supporting documentation is received by the SBA, they will begin its application review, which takes approximately 14 days to determine approval.

Businesses interested in obtaining a grant via the RRF should prepare and act quickly. To obtain  assistance preparing this information or to apply, contact Doeren Mayhew’s CPAs today.