Restaurants and bars can apply now for federal COVID relief funds. Here’s what to know

·4 min read

Starting Monday, eligible businesses can apply for federal COVID-19 relief through the $28.6 billion Restaurant Revitalization Fund, or RRF, established by the $1.9 trillion coronavirus stimulus package signed into law in March.

Here’s what to know and how to apply.

What is the RRF?

The program, included in the American Rescue Plan, provides grants to help restaurants, bars and other food or beverage businesses “keep their doors open,” according to the Small Business Administration.

It will provide businesses with funding equal to their revenue lost due to the pandemic — including up to $10 million per business and up to $5 million per physical location. The minimum grant is $1,000.

“Recipients are not required to repay the funding as long as funds are used for eligible uses no later than March 11, 2023,” the SBA says.

The funds can be used to cover payroll expenses, mortgage or rent expenses, utility payments, maintenance expenses, the construction of outdoor seating, supplies, food and beverage expenses, operating expenses and business debt service.

Who is eligible?

Some businesses that have experienced revenue losses related to the coronavirus pandemic may be eligible, including:

Restaurants

Bars

Breweries, wineries, distilleries, tasting rooms and taprooms with onsite sales that account for at least 33% of their gross receipts.

Food stands, carts and trucks

Snack and “non-alcoholic beverage bars”

Caterers

Bakeries with onsite sales to the public that account for at least 33% of gross receipts.

Inns with onsite sales of food and drinks that make up at least 33% of gross receipts

Licensed facilities of a “beverage alcohol producer where the public may taste, sample or purchase products”

How to apply

Businesses can apply through “SBA-recognized Point of Sale (POS) vendors” or directly through the online portal.

A sample application form can be found here. Some businesses will need to register for an account in advance.

Applicants will need a completed and signed IRS Form 4506-T and gross receipts documentation. Businesses that have onsite sales that account for 33% of their gross receipts will need to have documentation showing they meet the requirement.

How it works

The SBA will accept all applications starting Monday but will only process “priority group applications” for the first 21 days that applications are open.

These include businesses at least 51% owned by women, veterans, people who have been “subjected to racial or ethnic prejudice or cultural bias” and people whose “ability to compete in the free enterprise system has been impaired due to diminished capital and credit opportunities as compared to others in the same business area.”

After 21 days, the SBA will process applications in the order which they are approved.

“The online application will remain open to any eligible establishment until all funds are exhausted,” the SBA says.

The SBA has set aside $4 billion for applicants with 2019 gross receipts from $500,001 to $1.5 million; $5 billion for applicants with 2019 gross receipts of no more than $500,000; and $500 million for applicants with 2019 gross receipts of up to $50,000.

How funding is determined

Calculations will vary based on how long a business has been open.

For businesses open prior to or on Jan. 1, 2019, payments are calculated based on their 2019 gross receipts minus their 2020 gross receipts and any Paycheck Protection Program loans.

Applicants that began ”operations partially through 2019” will have payments calculated by subtracting their 2020 gross receipts and PPP loans from their average 2019 monthly gross receipts times 12.

For businesses that opened between Jan. 1, 2020 and March 10, 2021 and businesses that haven’t opened but have paid eligible expenses, the SBA will calculate payments by subtracting their 2020 gross receipts, 2021 gross receipts and PPP loan amounts from what they spent on “eligible expenses between February 15, 2020 and March 11, 2021.”

Why it matters

Restaurants, bars and other businesses were hit hard by COVID-19 as many were forced to close or limit their operations and services at the start of the pandemic.

The Independent Restaurant Coalition estimates that nearly half of the restaurant industry lost employment within the first six weeks of the pandemic.

As of Dec. 1, more than 110,000 “eating and drinking places” were closed temporarily or permanently, according to a January report from the National Restaurant Association.

“Recognizing the great urgency to help restaurants keep their doors open – and with a clear mandate from Congress – the SBA worked at a breakneck speed and is excited to launch this program,” Patrick Kelley, SBA Associate Administrator, Office of Capital Access, said in a statement.

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