The U.S. Small Business Administration (SBA) moved closer over the weekend to distributing $28.6 billion in direct aid to restaurants with the release of detailed applicability information and a sample application form.
The agency did not set a date for starting the application process for the Restaurant Revitalization Fund (RRF), which was created by Congress to grant up to $5 million per restaurant or $10 million per multi-unit operation. SBA says it intends to test the process first with a seven-day trial involving restaurants whose Paycheck Protection Program applications indicate they are like to qualify for an RRF grant. They will not be provided with funds at that time, SBA specified.
That pilot effort will take place during the next two weeks, SBA said. At an undisclosed time afterward, the application process will commence, according to the announced plan.
Restaurants will be able to apply through their POS system, provided it’s on the list of systems that have been integrated into the SBA’s program, or directly via the internet.
As previously announced, priority will be given during the first 21 days of the screening process to applications from restaurants that are at least 51% owned by women, veterans and what SBA characterizes as “socially and economically disadvantaged individuals.”
It defines the latter as operators “who have been subjected to racial or ethnic prejudice or cultural bias because of their identity as a member of a group without regard to their individual qualities.”
Any restaurant operator can apply after that initial three-week stretch. Applications will be considered until the $28.6 billion is depleted or replenished, an option that Senate Majority Leader Chuck Schumer, D-N.Y., has already cited as a possibility.
Smaller operations will be given a preference through funding set-asides. About $5 billion will be reserved for operations that had 2019 gross revenues of $500,000 or less. Another $4 billion will be earmarked for places that had 2019 revenues falling between $500,001 and $1.5 million. An additional $500 million will go to establishments with less than $50,000 in 2019 revenues.
The amounts granted will be determined by subtracting an applicant’s 2020 revenues and any PPP amounts from their 2019 sales volume. New specifics were released for operations that opened sometime during 2019 or in the first three months of 2020, before the pandemic had begun.
A sample application is available here.
The funds can be used for payroll, rent, mortgage payments, debt service, food and beverage supplies, the construction of outdoor dining facilities, personal protective equipment (PPE) and cleaning supplies, among other routine costs. The National Restaurant Association has asked the SBA to expand that list to include alcoholic beverages.
A complete list of the currently approved expenses can be found here.
The SBA is also being encouraged to extend the period in which the grants can be spent, into the first quarter of 2023. The permitted time frame is currently the rest of the calendar year 2021.
SBA officials have indicated that the agency intends to automate at least a portion of the application and distribution programs because of the expected volume of grant requests. Those representatives stressed that there is no precedent for the RRF, suggesting the technology is cutting edge and largely untested.
The $28.6 billion was set aside by Congress specifically to help restaurants, which are widely regarded as the businesses most impacted by the pandemic. All but a few states ordered restaurants to close their dining rooms back in March and April of 2020.
The SBA has responded to requests from trade groups and expanded eligibility to include bakeries, brewpubs and tap rooms, among other types of facilities.