Black Friday sale: Up to $1400 off bookkeeping, 100% tax-deductible.
Editor’s note: On Monday, May 24th the SBA abruptly closed the Restaurant Revitalization Fund’s application portal after the program ran out of funds. This closure comes only three weeks after the program began. While it remains possible that the RRF will be funded again in an effort to support the many restaurants that missed out on funding, at this time, there are no guarantees. We will update this post with more information as it comes available.
What is the Restaurant Revitalization Fund?
The Restaurant Revitalization Fund offers tax free grants to impacted businesses in the restaurant and service industries. The purpose of these funds are to make up for lost revenue due to shutdown or reduced operations. The maximum amount for a grant is $10 million with a limit of $5 million per physical location for franchises.
Since it’s a tax-free grant, these funds do not need to be paid back and will not be treated as taxable income for your 2021 taxes. This effectively makes Restaurant Revitalization Fund grants (RRF grants) free money.
Who is eligible for an RRF grant?
From food trucks to brewpubs and so much in between, the Restaurant Revitalization Fund is wide reaching. If you’re a business whose primary operation is serving food and drink, you are eligible for the restaurant grant—so long as you meet certain conditions.
To be eligible for an RRF grant, you must:
- Have sales of food and beverage make up at least 33% of your gross receipts
- Have no more than 20 locations as of March 13, 2020
You would be ineligible for an RRF grant if you:
- Received a Shuttered Venue Operator (SVO) grant or have a pending application
- Are a publicly traded company
- Are a state or local government owned business
- Do not operate primarily in the United States
- Have filed for bankruptcy or are permanently closed
What information do I need to get the RRF grant?
You need to calculate the grant amount you’re eligible for on the application. The restaurant grant calculation may require you to provide any of the following information:
- Your gross receipts
- Any PPP loan amounts
- Certain expense amounts
Your gross receipts are your sales before any discounts, returns, chargebacks, or processing fees. You can typically find this information on a tax return or from your point of sale (POS) system.
If you received any PPP loans, you need to provide the loan amounts. This includes both first and second draw PPP loans. You can find this information either on the loan agreement or by looking at your bank deposits for the month you received them.
Businesses that opened in 2020 or 2021 need to provide how much was spent on certain eligible expenses since opening. These eligible expenses are the same as what an RRF grant can spent on. You can find this information in your expense tracker, transaction history, or bookkeeping solution (like Bench).
How do I calculate my RRF grant amount?
There are three different possible calculations to find your RRF grant amount. Which calculation you use depends on when your business opened.
Businesses opened prior to 2019
If your business opened prior to 2019, you need the following information to calculate your RRF grant amount:
- Gross receipts for 2019
- Gross receipts for 2020
- Any PPP loan amounts (first and second draw)
Take your gross receipts for 2019 and subtract your gross receipts for 2020. Do not include any PPP loans, SBA debt relief payments, EIDL advance, or state or local emergency grants as gross receipts. Reduce this amount by any first draw or second draw PPP funds you received.
The grant calculation for businesses opened prior to 2019 is:
Grant amount = 2019 gross receipts - 2020 gross receipts - total PPP funds
Businesses opened during 2019
If your business opened during 2019, you need the following information to calculate your RRF grant amount:
- Total months you were operational for in 2019
- Gross receipts for 2019
- Gross receipts for 2020
- Any PPP loan amounts (first and second draw)
A business that opened in 2019 won’t have access to a full 12 months of 2019 gross receipts. Instead, they can “annualize” their gross receipts. Start by taking your gross receipts in 2019 and divide by the number of months you were open for. This is your average monthly gross receipts. Multiply your average monthly gross receipts by 12 to get your “annualized” gross receipts.
Then, take your annualized gross receipts for 2019 and subtract your gross receipts from 2020. Reduce this amount by any first draw or second draw PPP funds you received.
The grant calculation for businesses opened during 2019 is:
Grant amount = 2019 annualized gross receipts - 2020 gross receipts - total PPP funds
Businesses opened after 2019
For businesses that opened after 2019, the calculation is different given there’s no prior year to compare 2020’s gross receipts to. Instead, you must tally up all eligible expenses and gross receipts you have had since opening.
The grant amount is calculated by taking your eligible expenses and subtracting the gross receipts. This means that for businesses that opened after 2019 to be eligible for an RRF grant, they must have operated at a loss (negative net profit). Then, reduce this amount by any first draw or second draw PPP funds you received.
The grant calculation for businesses opened after 2019 is:
Grant amount = total eligible expenses - total gross receipts - total PPP funds
How Bench can help
Having a Bench bookkeeper on your side provides you with clear information on your monthly revenues and expenses. Today, properly completed books will help you apply for a restaurant grant with the numbers you need to fill out an application. But down the line, it can help you make important cost cutting decisions or plan for that next stage of growth. Learn more.
What can I spend my RRF grant on?
The money from the Restaurant Revitalization Fund comes with restrictions on how you can spend it. The funds can only be used on select expenses incurred between February 15, 2020 and March 11, 2023.
An RRF grant can be used to cover the following expenses:
- Payroll costs including paid sick leave
- The principal or interest on any mortgage obligation
- Rent or lease payments
- Utilities
- Maintenance expenses including renovations to accommodate health guidelines such as outdoor seating
- Supplies such as protective equipment and sanitizing products
- Supplier costs within the scope of normal business practice
- Typical operational expenses
- Any other expenses the SBA determines to be essential
How do I apply for an RRF grant?
Registration for the grant starts on April 30 with applications starting to be accepted on May 3 at 12:00 PM EDT. The SBA will be taking applications through a specific portal, restaurants.sba.gov.
For the first 3 weeks, only a select group can apply while they test the system. This includes businesses owned by women, veterans and socially and economically disadvantaged individuals can apply. The general public can start applying on May 24. The SBA is estimating a two week turnaround time from application to receiving funds.
You can start preparing today by gathering the information you need to apply. This includes information for anyone owning 20% or more of the business, your business’s address and contact information, any PPP loan documents, and getting your bookkeeping caught up for 2019 and 2020.
What documents do I need to apply for an RRF grant?
Businesses need to provide documentation to support the gross receipts numbers on their application. This can be done with any of the following for both 2019 and 2020:
- Tax returns
- Income statements or profit and loss statements (like those provided by Bench)
- Bank statements
- Point of sale reports and an IRS form 1099-K
- Tax and Trade Bureau (TTB) Forms 5130.9 to prove food and beverage make up 33% of a business’s gross receipts
In addition to providing one or more of the documents above, businesses need to fill out the application form, SBA form 3172.
Additional resources
- 2021 Ultimate List of US Small Business Grants
- The Second PPP Loan: What You Need to Know
- The American Rescue Act: A Summary For Small Businesses
