What's in the $29 billion Restaurant Revitalization Fund?
Some half a million independent restaurant owners across the U.S. celebrated a major victory last week when Congress passed a rescue package for small businesses, including billions of dollars in federal aid for restaurants that suffered financial losses related to the COVID-19 pandemic.
The $28.6 billion Restaurant Revitalization Fund, part of the Biden Administration's $1.9 trillion American Rescue Plan Act, will offer direct grants to restaurants and other qualifying food businesses, offering urgent relief to ailing establishments. The targeted aid comes not a moment too soon — independent restaurant owners across the country have long maintained that grants, versus loans they have to pay back, are crucial to their continued operation.
"It's very clearly a grant, not a loan, and that's massive, and super, super important," said Naomi Pomeroy, a restaurant owner and founding member of the Independent Restaurant Coalition (IRC), a trade group formed to help restaurants hurt by COVID-19. "I can't stress enough how little we need more loans like those provided by the Paycheck Protection Program."
Indeed, the paycheck loans didn't meet the needs of many restaurateurs, who said they were hobbled by restrictions on how the funds could be spent and had to take on debt to cover ongoing expenses and operating costs.
The IRC has been advocating for the revitalization fund, which is modeled after the group's $120 billion RESTAURANTS Act, first proposed in April in a letter to Congress.
"For me, this is a lifeline that will enable me to get back up on my feet again, build my business back in a way that will keep people working there and operate in the future," Pomeroy said. The James Beard-award winner said her 600-square-foot fine dining restaurant, Beast, was so challenged by the pandemic that she has since converted it into a community market, called Ripe Cooperative.
She compared businesses like her own at this stage in the pandemic to lifeless bodies in need of emergency assistance.
"This fund is like the oxygen in CPR," Pomeroy said. "If we didn't have that, we would be dead."
Already, more than 110,000 restaurants —about one in six across the U.S. — have closed permanently, resulting in the loss of 2.4 million jobs. Small restaurants lost over $135 billion in sales last year, while the broader industry lost $240 billion, according to the National Restaurant Association.
Details must still be finalized around when and how the Small Business Administration will award grants to eligible business owners. But a few things are already clear. For example, the revitalization fund is prioritizing small and minority-owned establishments that might otherwise end up at the back of the line for money and that were squeezed out of the initial round of Paycheck Protection loans.
Which establishments qualify?
The fund defines restaurants liberally, deeming almost any kind of business that serves food or drink as its primary purpose eligible for grants. Restaurants and bars are eligible, as are food stands, food trucks, food carts, catering businesses, saloons, inns, taverns, breweries and licensed beverage alcohol producers "where the public may taste, sample or purchase products," the bill states.
During the first 21 days of grants, the SBA will prioritize applications from women-, veteran- and minority-owned establishments.
As part of the program, $5 billion in funding will also be reserved for the smallest independent restaurants, which before COVID-19 earned $500,000 or less in a year, so that bigger establishments don't gobble up the funds. Chain restaurants with more than 20 locations are excluded altogether, as are publicly traded companies. In general, the SBA will award grants based on the order in which applications are received.
How will the grants be calculated?
Eligible restaurants can expect grants that match their pandemic-related revenue loss, calculated by taking their revenue in 2019 and subtracting 2020 revenue and any PPP loan monies received. For example, a restaurant that earned $1 million in 2019 and $600,000 in 2020, and that also received a $200,000 PPP loan, would be eligible for a $200,000 revitalization grant. Economic Injury Disaster Loans (EIDL) loans aren't deducted from RRF grant amounts. Entities are entitled to grants worth up to $10 million, or $5 million per physical location.
Are there limits on how funds may be spent?
Restaurant owners can use the federal aid to cover a range of expenses, from payroll to personal protective equipment and other operational expenses. They will likely have to account for how they used their grant money, but the SBA has not yet released specific guidance.
"Just because it's a grant doesn't mean there still won't be accountability and oversight," said Aaron Frazier, director of health care and tax policy the National Restaurant Association, during a press conference on the fund's implementation. "There still might be reports on what you're spending this money on under RRF for your grants."
In general, the funds cover a wide array of costs incurred during the pandemic, including outdoor dining construction expenses and spending on personal protection equipment and cleaning and sanitization from February 15, 2020 to December 31, 2021.
Eligible expenses include:
- Payroll costs
- Mortgage payments
- Rent
- Utilities
- Outdoor dining construction costs
- Personal Protective Equipment
- Food and beverage costs
- Supplier costs
- Operational expenses
- Paid sick leave
- Other expenses
I'm eligible. When, where and how do I apply?
As the fund has been quickly established, the SBA must still design rules and regulations detailing how businesses can apply. The program has not yet opened for applications, and the agency has yet to release a timeline for when it will begin accepting and processing requests for funds.
"We are still in a bit of limbo — we don't know when the application process will open. The SBA has to take some time with the legislation to write rules and at that point an application will be available," said Erika Polmar, executive director and co-founder of the IRC. "We are delighted it was included in the rescue plan and look forward to seeing how it plays out. The devil will be in the details of implementation."
Given the urgent nature of the fund, Frazier, of the National Restaurant Association, expects the federal government to move quickly. He anticipates the agency will release rules and applications as soon as April.
The 21-day window reserved for women, veterans, and socially and economically disadvantaged business owners would then likely occur in May or June, after which the revitalization fund would be open to all eligible applicants, according to the NRA.
In the meantime, restaurant owners can register for a Data Universal Numbering System (DUNS) number, a nine-digit identifier (assigned to companies by Dun & Bradstreet) that is like a "fingerprint" for businesses, Frazier said. A DUNS number is required to receive grants from the government.
Also register with the U.S. government's System for Award Management at SAM.gov in order to receive payments. Follow the IRC's step-by-step guidance on navigating the system.
The IRC also recommends that its members collect paperwork documenting the extent of their pandemic-related revenue losses between 2019 and 2020. Beware of vendors that claim to know how to usher applications though the process, as the system has not yet been established.
Finally, refer to the Independent Restaurant Coalition's website, saverestaurants.com for up-to-date guidance, fact sheets and other resources.
