Get in Line!

Preparing for the Restaurant Revitalization Fund

As of this writing, some of the details of the widely publicized Restaurant Revitalization Fund (RRF) are fuzzy – including when the application period officially starts. In any event, there are a number of things independent operators can do to prepare to get a piece of this proverbial pie.

Almost without exception, the RestaurantOwner.com members and Restaurant Startup & Growth readers whom I’ve interviewed have told me without hesitation: Paycheck Protection Program (PPP) funding was absolutely critical to their survival as they made necessary changes to their finance, marketing, operations and menu to adapt to the market in the wake of this pandemic.

 If the PPP kept your concept afloat, the next wave of rescue funding could to fill your sails -- particularly with a nationwide vaccination program well underway.

As of this writing, some of the details of the widely publicized Restaurant Revitalization Fund (RRF) are fuzzy, including when the application period officially starts. In any event, there are a number of things independent operators can do to prepare to get a piece of this proverbial pie.

And now is the time to be ready to get in line.

So says Janet Garetto, an intellectual property attorney and co-leader of Food, Beverage and Agribusiness Practice at Nixon Peabody, a global 100 law firm. Garetto is helping operators of all sizes gear up to get their share of the $23.6 billion is available for the Small Business Administration (SBA) to award in an equitable manner to businesses of different sizes based on annual gross receipts.

You should bear in mind the RRF is a federal grant. There is no requirement to repay the government any portion and the funds are not taxed. There are some hoops you have to jump through to be eligible for that money, explained below.

 According to a National Restaurant Association (NRA) Policy Brief, “eligible entities” include a restaurant, food stand, food truck, food cart, caterer, saloon, inn, tavern, bar, lounge, brewpub, tasting room, taproom, licensed facility or premise of a beverage alcohol producer where the public may taste, sample, or purchase products, or other similar place of business in which the public or patrons assemble for the primary purpose of being served food or drink.

The funds must be spent on payroll; principal or interest on mortgage obligations; rent; utilities; maintenance including construction to accommodate outdoor seating; supplies such as protective equipment and cleaning materials; normal food and beverage inventory; certain covered supplier costs; operational expenses; paid sick leave; and any other expenses that the SBA determines to be essential to maintaining operations.

 Favoring independents, business entities eligible for the funding are limited to owners and operators of 20 or fewer establishments (together with any affiliated business), regardless of ownership type of the locations and whether those locations do business under the same or multiple names, in business as of March 13, 2020. (An affiliated business has an equity or right to profit distribution of 50 percent or more, or has contractual authority to control the direction of the business, provided that such affiliation “shall be determined as of any arrangements or agreements in existence as of March 13, 2020.)

Moreover, notes Garetto, there is a 21-day period where the SBA gives extra preference owned by women, veterans, and those that fall under certain socioeconomic categories.

The actual application is not available yet,” said Garetto in a mid-March interview. “Now is the time to get prepared. Getting in line early is helpful. There are so many businesses that need this funding, the demand will outweigh the supply.”

 Of the $23.6 billion, $5 billion is available to businesses with gross receipts of $500,000 or less during 2019. The total maximum grant amount for an eligible business and any affiliated businesses is capped at $10 million and is limited to $5 million per physical location of the business.

 Housekeeping Items

There are housekeeping items operators should be taking care of now, to be ready and armed to fill out the application when the SBA is ready to launch,” says Garetto.

Garetto advises operators study the basic provisions of the RRF, and tips and tricks, including an instructive and detailed policy brief created by the NRA (see below):

 https://restaurant.org/downloads/pdfs/advocacy/understandingrrf

 And now is the time to get your 2019 and 2020 financial statements in order. As long as they are presented in good faith, they will be accepted as verified, given the uncertainty of the current economy.

As noted in the NRA Policy Brief, “an eligible business may receive a tax-free federal grant equal to the amount of its pandemic-related revenue loss, calculated by subtracting its 2020 gross receipts from its 2019 gross receipts. If the business is not in operation for the entirety of 2019, the total is the difference between 12 times the average monthly gross receipts for 2019 and the average monthly gross receipts in 2020 (or a formula from SBA).”

You can navigate the process on your own; however, busy operators are advised to enlist their lawyers to interpret the RRF's language. An accountant could be invaluable in applying the rules to your business and arriving at the numbers. Pandemic-related revenue losses for business are reduced by any amounts received from Paycheck Protection Program (PPP) First Draw and Second Draw loans in 2020 and/or 2021.

Mid-march, Garetto said the second PPP draw process was underway with a deadline of March 31. “You should proceed down both paths, the RRF and the PPP.”

A Grant Not a Loan

As with all federal grant money, to be eligible for the funds, there is a two-part registration process. First, you must acquire a DUN number. Short for The Data Universal Numbering System, DUNS, is a proprietary system developed and managed by Dun & Bradstreet that assigns a unique numeric identifier to a single business entity. 

If your business does not yet have a DUN number, you can register at:

https://fedgov.dnb.com/webform/displayHomePage.do

Once you’ve been assigned a DUN number, you will need to register with SAM.gov. The System for Award Management, or SAM, is a government-wide portal that is consolidating the capabilities of multiple systems and information sources used by the Federal government in conducting the acquisition and financial assistance (which includes grants and cooperative agreements) processes.

You can create an account and complete the process at:

https://sam.gov/SAM/

Stay in Touch

Garetto emphasized operators should stay in touch and follow the news. “If I were an independent operator, I would be ready and watching the news alert to know when the application. I’d complete the application in a soon as possible.”

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