As of April 29, 2021, many restaurateurs remain eagerly awaiting the Restaurant Revitalization Fund (RRF) application’s release—and once released, they need to act quickly since the RRF is first-come, first serve.
The SBA has finally provided the start date for the RRF grant applications, restaurateurs should know a couple of things now to be prepared once the applications go live:
Note: We can confirm that the overall process will be less burdensome than previously thought, because applicants will not be required to obtain either a Data Universal Numbering System (DUNS) number or a government System for Award Management website account.
The American Rescue Plan Act (ARPA) of 2021 includes a significant tax-relief measure for small and independent restaurants. Specifically, ARPA allocates over $25 billion in tax-free pandemic relief grants to the Restaurant Revitalization Fund (RRF) for bars and restaurants—available in awards up to $10 million per company (capped at $5 million per location). The RRF is intended to help small restaurants and bars pay rent, payroll and other expenses during the pandemic. Note that the RRF is administered by the SBA.
Since the tax-free RRF grants are intended to cover a business’s total “pandemic-related revenue loss,” generally, an eligible business may receive an amount equal to the difference between the business’s 2020 revenue as compared to its 2019 revenue. Moreover, every applicant must remember that “pandemic-related revenue losses” are reduced by any PPP Loans received (first and/or second draw). Consider these various scenarios depending on the dates of operation:
Again, these grants are not taxable as income; moreover, the expensed paid with the grant proceeds are deductible from gross income. However, businesses should note that if it doesn’t use all grant funds received, or if the business permanently closes before or on the last day of the covered period, any remaining funds not used for allowable expenses must be returned.
The SBA is set to award RRF grants in the order the applications are received, although for its first 21 days priority will be given to certain applicants such as businesses owned by women and veterans (among others). It is widely expected, based on last week's congressional hearing, that the SBA is projected to roll-out the RRF within the next 30 days. Act quickly!
Unlike PPP Loans where banks submit applications to the SBA, RRF grant applications are submitted directly to an SBA portal by the applicant. We can help you determine if your business qualifies as an “eligible entity” and whether or not your “eligible expenses” are covered. We can also assist you with compilation of the contemporaneous documentation needed to support your representation to the SBA that the grant is vital to support your ongoing operations. As with PPP Loans, we anticipate that the SBA will scrutinize applicants—and we want to make this process as streamlined as possible for you. Contact our team by calling (410) 497-5947 or requesting a consult online now.