Restaurants were extremely hard-hit by government-imposed shutdowns and other restrictions related to the COVID-19 pandemic. Congress created the Restaurant Revitalization Fund to provide relief to restaurants, but the demand for the funds was far greater than the supply. According to the SBA, they received more than 278,000 applications by June 30th, seeking more than $72.2 billion in funding.
The SBA closed the program and stopped accepting applications on July 2nd. However, less than 10 days after the SBA launched the RRF Portal, the applications submitted equated to more than twice the amount of funds available.
During this week’s episode of The Tip Share, RASI Director of Compliance, Brian Smith, sits down with RASI New Business Development Strategist, Dave Downs to discuss the latest updates within the RRF and the need-to-know details for those who received funding.
How many restaurants benefited from the Restaurant Revitalization Fund?
According to the SBA, the RRF provided $28.6 billion to more than 100,000 restaurants, bars, and other businesses that provide on-site food and drink.
What are eligible expenses and restrictions that RRF grant recipients should know about?
Eligible business expenses include:
- Business payroll costs, including health insurance
- Payments on any business mortgage obligation (both principal and interest; note: this does not include any prepayment of principal on a mortgage obligation)
- Business rent payments (note: this does not include prepayment of rent)
- Business debt service (both principal and interest; note: this does not include any prepayment of principal or interest)
- Business utility payments, maintenance expenses
- Construction of outdoor seating
- Business supplies (including protective equipment and cleaning materials)
- Covered supplier costs, same definition as under PPP Forgiveness nonpayroll expenses—food purchases
- Day to Day Business operating expenses
- A few examples include:
- Legal expenses, marketing expenses, insurance expenses, business licenses, shipping fees, equipment (new hood or a new grill, new fryers, etc.)
- A few examples include:
Restrictions are as follows:
- Recipients cannot claim wages paid with RRF grant money as wages for purposes of the ERTC or PPP forgiveness.
- Recipients cannot claim other expenses paid with RRF grant money as nonpayroll costs for purposes of PPP forgiveness.
The SBA considers this “double-dipping.”
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What is the timeframe for using the RRF grant money?
The Restaurant Revitalization Fund covered period begins on February 15, 2020 and ends on March 11, 2023.
The recipient has until March 11th of 2023 to use the RRF grant unless the business has permanently closed. If the business permanently closes, the covered period will end when the business permanently closes; or, on March 11, 2023 – whichever occurs sooner.
Past-due expenses qualify as RRF expenses. However, for expensesses incurred on February 15, 2020 or after, be careful not to use the following:
- Payroll costs claimed as ERTC eligible wages
- Forgivable payroll expenses on the PPP forgiveness application
- Nonpayroll expenses claimed on the PPP Forgiveness application
Would a grant recipient ever have to pay back any of the funds?
So long as funds are utilized for eligible applications no later than March 11, 2023, there is no requirement for recipients to repay the funding.
Recipients that are unable to use all of the funds received on eligible expenses by the end of the covered period must return any unused funds to the Treasury.
Are there any reporting requirements for RRF grant recipients?
No later than December 31, 2021, all recipients are required to report to the SBA how much of their RRF grant has been used against each eligible use category. If the recipient fully expends their funds prior to December 31, 2021, they will be asked to certify that proceeds have been used on eligible expenses. A requirement for annual reporting submissions applies to any applicant who doesn’t fully expend RRF grant funds before December 31, 2021. This will remain until they fully expend the grant funding or the covered period expires.
Is the grant money taxable and are the expenses deductible?
According to the American Rescue Plan Act of 2021 (ARPA), the amounts received from the SBA in the form of a Restaurant Revitalization Grant shall not be included in gross income (non-taxable); additionally, the expenses incurred are deductible.
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