Restaurant Revitalization Fund (RRF) + Application Opening Announced

On April 27, 2021, the U.S. Small Business Administration announced that registration for the $28.6 billion Restaurant Revitalization Fund will begin on Friday, April 30, 2021, at 9 am ET, with applications being accepted on Monday, May 3, 2021, at noon ET. The online application will remain open to any eligible establishment until all funds are exhausted. Register here or through an SBA Point-of-Sale Restaurant Partner (currently Square or Toast customers with more to be announced soon by the SBA).

The SBA recommends applicants review program information and documentation requirements in anticipation of the fund’s opening. The documentation that will be required includes 2020 and 2019 tax returns or income statements (externally or internally prepared) and three months of bank statements for the applicant’s operating account. A comprehensive overview of the program can be viewed here.

On Tuesday, April 27, the SBA hosted a virtual training webinar to walk through the registration and application process. The following are some important takeaways:

• It is anticipated that the RRF portal will take 25 minutes to complete; with much shorter durations expected for applicants who have prepared in advance
• The SBA will be uploading screenshots of its portal for applicants to prepare
• Two-factor authentication will be required to complete the application (cell phone will be needed)
• PPP1 and PPP2 loan amounts will automatically be populated into the portal based on the applicant’s EIN
• Applicants can automatically link their bank account information with their bank’s website login, with the option to input manually
• If an applicant elects to manually input bank account and routing number or provides internal/external income statements as opposed to tax returns, there will likely be a delay in processing the funds
• Certain eligible entities (bakeries, brewpubs, inns) must demonstrate that at least 33% of 2019 gross receipts were comprised of on-site sales

The SBA will hold a second virtual training webinar on Wednesday, April 28. Click here to register for this event. A recorded copy of the presentation will be uploaded to the SBA’s YouTube Page. To learn more about the RRF, please contact your Lutz representative.

Updated 4/27/2021

Update + Restaurant Revitalization Fund

The US Small Business Association (SBA) recently updated its website to provide additional details on the Restaurant Revitalization Fund (RRF). The American Rescue Plan Act established the RRF to provide funding to help restaurants and other eligible businesses keep their doors open. This program will provide restaurants with funding equal to their pandemic-related revenue loss up to $10 million per business and no more than $5 million per physical location. Recipients are not required to repay the funding as long as funds are used for eligible uses no later than March 11, 2023.

The specifics of the program did not change, with the grant amounts being equal to the decrease in 2020 gross receipts vs. 2019 gross receipts, less PPP1 and PPP2 loan amounts. The same list of eligible entities and qualifying expense categories are applicable, with the first 21 days of grant disbursements set aside for certain priority groups (owned at least 51% by women, veterans, or socially and economically disadvantaged individuals).

The SBA did provide clarity that applicants will not need to register with SAM.gov or obtain a DUNS or CAGE identifier. Additionally, it was clarified that all applicants can apply on the first day of the SBA’s portal opening to begin the process, even if the applicant does not fit the criteria of a priority group.

Applicants will be able to apply through SBA-recognized Point of Sale Restaurant Partners or directly via SBA in a forthcoming online application portal. To aid in the preparation of applying, a sample Form 3172 Restaurant Revitalization Funding Application was released. On April 27, 2021, Administrator Isabella Casillas Guzman announced the SBA will begin registrations on Friday, April 30, 2021, at 9 a.m. EDT and open applications on Monday, May 3, 2021, at noon EDT for the RRF.

To learn more about the RRF, please visit the SBA’s website. If you have any questions, please contact us.

Updated 4/27/2021

Restaurant Revitalization Fund (RRF)

The American Rescue Act, passed on March 10, 2021, includes $28.6 billion in direct aid for the restaurant industry to be distributed by the US Small Business Association (SBA). Eligible businesses can receive a tax-free federal grant equal to its Pandemic Related Revenue Loss. These grants do not need to be repaid.

1. Who is eligible?

Any restaurant or similar business[1] who owned or operated 20 or fewer establishments (together with any affiliates[2]) as of March 13, 2020. Publicly-traded companies are ineligible, as are any applicants with a pending application for a Shuttered Venue Operators Grant (Section 324 of the Economic Aid Act).

2. How is the Pandemic Related Revenue Loss (grant) amount determined?

The amount of grant to be received by the restaurant is calculated by subtracting its 2020 gross receipts from its 2019 gross receipts, less any Paycheck Protection Program (PPP) first and second draw loan amounts. The grant is capped at $10 million per business and limited to $5 million per physical location.

If the restaurant was not in business for the entirety of 2019, the difference in 2019 and 2020 gross receipts is calculated based on the average monthly gross receipts during 2019 times 12, less any PPP loan amounts:

There are additional pandemic-related revenue loss calculations for instances in which the restaurant was not in business until 2020.

3. What expenses can a business spend the Restaurant Revitalization Funds on?

Funds can be spent on payroll, principal, or interest on any mortgage obligation (not including prepayments), rent, utilities, maintenance including construction to accommodate outdoor seating, supplies including protective equipment and cleaning materials, food and beverage expenses, covered supplier costs, operational expenses, paid sick leave, and any other expenses that the SBA determines to be essential to maintaining operations.

4. How long does the business have to spend the funds?

A business can use the funds during the covered period, defined for the RRF as the period between February 15, 2020, through December 31, 2021. The SBA has the ability to extend this date range for up to two years. If all grant funds are not spent by the business, or the business permanently closes before the end of the covered period, the business must return any unused funds to the Treasury.

5. What is the tax treatment for the business receiving the RRF grants?

The grants will not be taxable income, and the business will keep the federal tax deductions for the relevant expenses used with grant monies.

6. How will the grant funds be distributed?

For the first 21-days of grant distribution, the SBA shall prioritize awarding eligible entities with small business concerns owned and controlled by women, veterans, or socially and economically disadvantaged small business concerns. After this period, funds will be disbursed on a first-come, first-serve basis.

7. What are the next steps?

As of the date of this posting, we do not know when the SBA will begin disbursing funds or how the rollout of fund disbursements will work. The US Chamber of Commerce recommends restaurant owners that want to apply for RRF grants immediately register with the government using the System of Award Management (SAM). To register for the SAM, restaurant owners need to do the following:

• Register for a free Data Universal Numbering System (D-U-N-S Number) at: https://www.dnb.com/duns-number/get-a-duns.html
• Register for a free System for Award Management (SAM Number) at: https://sam.gov/SAM/

We understand that interested parties will need to be registered on the SAM system prior to receiving the RRF grant. The other thing interested restaurant owners can do at this point is to begin preparing the relevant paperwork demonstrating the gross receipts in 2020 and 2019 and PPP1 and PPP2 loan amounts (if received). Please contact us or your Lutz Representative with questions.

[1] Includes any 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.

[2] Affiliation measured by greater than or equal to 50% of equity or right to profit distributions or contractual authority to control the relevant businesses.

NEW STIMULUS PACKAGE SIGNED INTO LAW

President Biden signed the American Rescue Plan Act last week, which is the third major piece of legislation targeting the COVID-19 pandemic. It contains several tax provisions that impact businesses and individuals.

Business updates

FFCRA credits extended

Paid sick and family leave credits are now extended through September 30, 2021. The program continues to be voluntary in 2021, however, the 80-hour limitation on paid sick leave hours resets on April 1, 2021. For purposes of the family leave credit, eligible wages increased to $12,000 from $10,000.

Employee retention credit (ERC) extended

The ERC is now extended through December 31, 2021. This credit can be substantial for employers who qualify. In 2021, a business may qualify if it either (1) demonstrates at least a 20% decline in a 2021 calendar quarter gross receipts compared to the same calendar quarter in 2019; or (2) experiences a business shutdown mandated by a government authority.

Recovery startup businesses, those that began after February 15, 2020 and had less than $1 million in gross receipts, could be eligible for an expanded credit of up to $50,000 per quarter for the third and fourth quarters of 2021.

Restaurant Revitalization Grants

The Small Business Administration has a new program specific to restaurants which aims to offset a “pandemic-related revenue loss” in 2020. Guidance is needed from the SBA to detail how this program operates.

Individual updates

Unemployment benefits tax-free

For taxpayers with less than $150,000 in 2020 adjusted gross income (AGI), the first $10,200 of 2020 unemployment benefits are tax-free.

Stimulus checks

A new round of stimulus checks provides up to $1,400 per individual, including college students and qualifying relatives. Phase-outs are modified: $75,000 to $80,000 for single filers; $112,500 to $120,000 for head of household; and $150,000 to $160,000 for married filing jointly.

The IRS will issue checks based on 2019 filings unless the 2020 return has already been filed.

Child Tax Credit expanded

The 2021 credit is increased to $3,000 per child ($3,600 for six years or younger), subject to phase-out limitations. An advance on the credit will be available with IRS guidance coming.

Please contact us if you have questions and continue to follow our updates as further guidance is released.