The restaurant industry has undoubtedly been one of the hardest hit by the COVID-19 pandemic. The recently passed American Rescue Plan Act includes a vital provision for some of the businesses hardest hit by the pandemic, the Restaurant Revitalization Fund (RRF). The RRF will provide $28.6 billion in grants to restaurants and bars in need and will be administered by the Small Business Administration (SBA). Restaurants are able to apply for these grants based on proof of lost revenue. An additional $5 billion of this amount will be set aside expressly for businesses with 2019 gross receipts of less than $500,000. The funds received by restaurant operators pursuant to RRF will be tax free.
Most U.S. bars and restaurants that lost revenue in 2020 as compared to 2019 will be eligible to apply for a grant under the RRF. The Fund defines “restaurant” fairly broadly, which allows for additional business inclusion. However, restaurants that are part of a publicly-traded company or are owned by the federal government will be ineligible for RRF funding. Applications are expected to open in the first week of April, starting with prioritized groups which include business owners who are women, veterans and oppressed or minority owners. Once the prioritized application period ends, the applications will open up to a wider audience of restaurant owners.
Regardless of the status as a priority applicant or general applicant, each restaurant owner planning to take advantage of the RRF funding should follow a few steps prior to applying in April on the SBA website. These steps are as follows:
(1) Each business should register for a Dun & Bradstreet (DUNS) Number.
A DUNS number is a unique nine-digit identification number for each physical location of a business. You may register the business for a DUNS Number by following this link (https://fedgov.dnb.com/webform/)
When registering for a DUNS Number, the following information is required:
- Legal name
- Headquarters name and address for business
- DBA or other name by which business is commonly recognized
- Mailing Address (if different from headquarters and/or physical address)
- Telephone number
- Contact name and title
- Number of employees at your physical location; and
- Whether you are a home-based business.
(2) Register for the System Award Management (SAM).
SAM is a database that government agencies search to find contractors. Within SAM, the business will be able to represent if it is eligible for contracts under an SBA contracting program because it is disadvantaged, women-owned, veteran-owned, or located in an underutilized area. You may register a business within SAM by following this link (https://www.sam.gov/SAM/) and registering the entity.
(3) Once the business has a DUNS Number and is registered within SAM, the business may proceed with the RRF application, when it becomes available on the SBA federal grant website.
Restaurant operators and their attorneys would be wise to keep a close eye on the SBA’s federal grant funding web portal to view important dates and application opening periods relative to RRF. Additionally, please be aware that complex aggregation rules apply to many of the restaurant entities that may be applying for the RRF. Some of these rules may preclude certain entities from receiving the RRF funds. Please consult with an MMB attorney for advice concerning when and how these aggregation rules may apply to your business.
Additionally, the SBA will continue to release information concerning the rules which will govern how RRF funds may be spent, and further elaborate on eligibility requirements. Please stay in contact with your attorney to understand how these rules apply to your restaurant business and to your receipt of RRF funding.