May 4, 2021

Restaurant Revitalization Fund Offers Needed Lifeline

Since the start of the pandemic, Atlanta businesses have endured an action-packed lineup of government orders which have changed how businesses operate. For some this has meant modified hours, reduced capacity limits, and more restrictions on how to interact with customers. No one has been hit harder than the restaurant industry as many have had to transition to pick up or delivery service. In fact, Georgia just passed the Cocktails to Go Bill, which expands the services offered by restaurants. Given that greater help is needed, the American Rescue Plan created the Restaurant Revitalization Fund, which provides non-repayable grants equal to the pandemic losses incurred by an establishment. To help clients, prospects, and others, Wilson Lewis has provided a summary of the key details below.

What is the RRF?

The RRF is a non-repayable federal grant which provides a minimum relief amount of $1,000 up to $5M per physical location and $10M per business. A physical location is defined as a permanent structure with a distinct address. For food trucks, the address would be the same as the company headquarters. Remember that only businesses in operation prior to March 10, 2021, can participate. Also, RRF applicants can have a Paycheck Protection Program (PPP) loan and state or local grants, but not be a recipient of the Shuttered Venues Operators Grant (SVOG) funding.

Eligibility Rules

Only businesses that are not permanently closed and include operations where the public or patrons assemble for the primary purpose of being served food or drinks can apply. This includes restaurants, food trucks, food stands, caterers, bars, taverns, on-site producer facilities where the public may come to taste and purchase products, and snack and nonalcoholic beverage bars. Others such as bakeries, tasting rooms, taprooms, breweries, and micro-breweries must provide documentation that on-site sales to the public amounted to, at least, 33% of gross receipts in 2019. For those who opened in 2020, an alternate method must be followed. Conversely, golf clubs, places of gambling, strip clubs, and permanently closed businesses are not eligible.

RRF Calculation Methods

There are three calculation methods based on when a business commenced operations.

• In Operation on January 1, 2019 – For these applicants, take the 2019 gross receipts and subtract from the 2020 gross receipts. Then subtract the total amount of disbursed PPP1 or PPP2 loans regardless of whether received in 2020 or 2021. Finally, if the amount exceeds $5M per physical location then reduce the amount to $5M.
• Partial 2019 Sales – These applicants may use this calculation method or the one listed below. First, calculate the average monthly gross receipts for 2019, then subtract from 2020 gross receipts and subtract PPP loan funds regardless of whether received in 2020 or 2021. Finally, reduce the amount to $5M if it exceeds this amount per location.
• Began Operations Between January 1, 2020, and March 11, 2021 – These applicants should calculate the total amount spent on eligible expenses between February 15, 2020, and March 11, 2021. Then subtract gross receipts earned between January 1, 2020, and March 11, 2021. Finally, subtract the amount of disbursed PPP loans and adjust to $5M per location as necessary.

Covered Expenses

Like other federal relief programs, RRF recipients may only spend awarded money on eligible expenses. These include payroll costs, business mortgage obligations, rent payments, utility expenses, outdoor seating/protection construction, supplies, costs of food and beverage, covered supplier costs, and business operating expenses (i.e., accounting, legal, marketing, licensing). There is a provision that allows recipients to pay past-due eligible expenses only if they were incurred beginning on February 15, 2020, and ending on March 11, 2023.

Expense Reporting

RRF recipients are required to use all award funds by March 11, 2023. Unlike other programs, recipients have until December 31, 2021, to report through the application portal the amount of the award which has been used in each expense category. If funds are exhausted before year-end, then applicants will need to certify that proceeds have been used on eligible expenses. Finally, recipients that have not used the entire award by the end of year will be required to report the same expense information each year until the funds have been exhausted. The Small Business Administration (SBA) reserves the right to ask for additional documentation to validate the certification.

How to Apply

Interested businesses can apply for the RRF through one of the SBA-approved restaurant industry vendors or directly through the online portal. The following documentation should be compiled and ready to submit by all applicants, including:

• SBA Form 3172 – A completed, initialed, and executed copy of the application.
• Verification of Tax Information – This includes a copy of IRS Form 4506-T which should be completed and signed by the applicant.
• Gross Receipts Documentation – This can include copies of the business tax return, IRS Form 1040 Schedule C, IRS Form 1040 Schedule F, IRS Form 1065 (including K-1s), bank statements, financial statements such as Profit and Loss Statements, POS reports including IRS Form 1099-K

The following types of businesses will need to provide additional information, including:

• Bakeries Brewpubs, Tasting Rooms, Breweries, Wineries and Distilleries – These applicants must also provide evidence that onsite sales to the public comprise at least 33% of gross receipts for 2019. This can include the 2019 TTB Forms filed or internally created reports from inventory management, sales reporting, or accounting software.
• Inns – These applicants must also provide documentation providing that onsite sales of food and beverage to the public comprise at least 33% of 2019 gross receipts. These can include internally created revenue or accounting reports.

Contact Us

The Restaurant Revitalization Fund is a critical source of working capital for the already struggling restaurant industry. The combined impact of the RRF with other federal loan programs is designed to propel struggling Atlanta businesses back to profitability. If you have questions about the information outlined above or need assistance with another accounting or tax issue, Wilson Lewis can help. For additional information call us at 770-476-1004 or click here to contact us. We look forward to speaking with you soon.