UPDATE: April 27, 2021: The Small Business Administration will begin accepting Restaurant Revitalization Fund applications May 3 at 12 p.m. EST, the SBA shared in an emailed press release. Registration will begin on April 30 at 9 a.m. EST, and restaurants can attend virtual training webinars Tuesday at 2:30 p.m. EST and on April 28 at 1 p.m. and 2:30 p.m. EST to prepare. The online application will remain open until funds are depleted.
The National Restaurant Association wrote in an emailed statement that it is concerned the $28.6 billion fund will run out "in a matter of weeks — possibly only a few" due to high demand.
"We expect that day one numbers will be through the roof," Sean Kennedy, NRA's executive vice president for public affairs, said in a statement. "We will continue to work with the SBA and our members to ensure the application process goes smoothly, even as we're alerting Congress to our concerns about the limits of the current funds."
Restaurants are eager to access grants from the $28.6 billion Restaurant Revitalization Fund, but the program isn't robust enough to serve all eligible applicants, Patrick Kelley, associate administrator for the Small Business Association's Office of Capital Access, told the Independent Restaurant Coalition Tuesday.
Because of this cash shortage, Kelley urged operators to apply on the first day the program opens. He suggested that if industry demonstrates strong demand, Congress could eventually mandate a second funding round for the program.
While there isn't a date set for the program's application release, Kelley said the fund's opening is imminent and "on the precipice of opening." Once applications are open, restaurants can apply online at restaurants.sba.gov, but the website is not yet live.
"I know my restaurant and thousands of businesses in our community will be able to keep our doors open because of the SBA's effort," Caroline Styne, IRC member and co-founder of The Lucques Group, said during IRC's Q&A event Tuesday.
While not yet available, Kelley shared more information about how the Restaurant Revitalization Fund will operate so restaurants can prepare for opening day. The National Restaurant Association also published an FAQ last week about the ins and outs of the program, which will be updated as the SBA finalizes details. Here's a breakdown of what is laid out so far:
Grants could range from $1,000 to $5 million
- The SBA will likely enact a minimum grant award of $1,000, according to NRA's FAQ, in response to criticism that some PPP recipients received paltry funding. Grants will be capped at $5 million per location, or $10 million total for the eligible entity.
The program period will last through March 2023
- Currently, restaurants are allowed to use Restaurant Revitalization Fund money to cover eligible expenses accrued between Feb. 15, 2020, and Dec. 31, 2021. This period has been extended more than a year to end on March 11, 2023, Kelley said during the Q&A, as the foodservice industry continues to navigate aftershocks. The SBA has the authority to lengthen the program's timeframe by two years.
The SBA will troubleshoot the application process
- The SBA will choose volunteers who have self-identified as women, veterans or people of color and who have previously applied for Paycheck Protection Program loans to test the program for one week prior to the Restaurant Revitalization Fund's official opening. The volunteers will not receive grants during this pilot, however.
- Funds will be distributed two weeks after applications are made available on restaurants.sba.gov.
Money is earmarked for groups based on income
- $5 billion is reserved for restaurants with 2019 gross receipts of $500,000 or less.
- $4 billion is reserved for restaurants with 2019 gross receipts of between $500,000 and $1.5 million.
- $500 million is reserved for restaurants with 2019 gross receipts of $50,000 or less.
Shuttered or bankrupt operators aren't eligible
- Restaurants can't apply for a grant if they have closed permanently, have filed for Chapter 7 bankruptcy or have liquidated under Chapter 11 bankruptcy. Operators are also ineligible if they filed for Chapter 11, 12 or 13 bankruptcy without an approved reorganization plan.
- "If you had to make a business decision that it doesn't make sense for your doors to be open because of those restrictions, because you're [going] to end up spending more money by opening your doors, that's temporarily closed, because these funds would allow you to then get your doors open eventually," SBA Associate Administrator Julie Verratti said on Tuesday. "Businesses that had to temporary close are still eligible for this program."
Franchisees can't be publicly traded
- Franchisees of publicly traded restaurants can apply for the grants as long as the operator itself isn't publicly traded, according to NRA's FAQ.
- The franchisee or licensee must have "the right to profit from its efforts and bears the risk of loss commensurate with ownership" and must have "an equity or right to profit distributions of not less than 50% in the RRFG applicant."
POS systems can synch to applications
- Programs like Toast and Square can be embedded with an application program interface published by the SBA, adding an extra touch point for operators looking to apply. Restaurants will also be able to complete applications over the phone.
- "The Small Business Administration, led by Administrator Guzman, has spearheaded an effort to make this program as accessible to our industry as possible, and because of this, and trying to ensure that struggling businesses can access this program, they're allowing that point-of-sale vendors can partner with their restaurants to help them create the data they need to apply for funding and help them start their applications," Styne said Tuesday.
IRC will also be hosting a roundtable discussion with Toast Thursday at 12 p.m. EST to discuss what restaurants need to apply for the Restaurant Revitalization Fund. Kelley and Verratti will participate in the 60-minute event.
"It's really important that we get the word out so we are getting to the smallest of the small, the underserved communities, so that folks have access to these much-needed funds," Verratti said Tuesday.