Restaurant Revitalization Fund – Updated 4/20/21

Apr 20, 2021

Further details on the Restaurant Revitalization Fund (RRF) were released by the SBA late last week. Details regarding application requirements, eligibility, and a program guide were all included in this announcement. A sample application for the RRF can be found here.

Over the next two weeks and before the application launch, the SBA is initiating a 7-day pilot period for the RRF application portal. Selections for the pilot period will be made at random and the participants will be from existing borrowers of PPP funds in priority groups. The funds requested from these early participants will not be made available until the application portal is open to the general public. Also, the SBA is working on an application program interface to allow for the application to be embedded in POS systems such as Toast, Aloha, Clover, and Square. This interface will allow operators to be able to submit applications directly within the POS system.

The SBA is expected to announce the official application launch date soon. Once the application is open to the general public, the first 21 days will be reserve for the priority groups including businesses owned by women, veterans, and socially and economically disadvantaged individuals. Furthermore, there will be funds set aside for various revenue groupings. Currently, there is $5 billion set aside for applicants with 2019 gross receipts of less than $500,000. There is also $500 million set aside in grant money for applicants that had gross receipts less than $50,000. The fund also has set aside $4 billion for applicants that had 2019 gross receipts ranging from $500,000 and $1.5 million.

The National Restaurant Association recently published a Q&A which can be found here to help clarify several questions surrounding the RRF program. Some highlights and further information of additional points of clarification can be found below.

Covered Period
There is a discussion that the RRF covered period will potentially be extended for an additional 14 months, which would allow applicants to have until March 2023 to spend the grant money.

Eligibility
An entity that has permanently closed or has filed for bankruptcy protection (without an approved plan of reorganization) will not be eligible for the RRF grant. Furthermore, the eligibility requirements include demonstrating at least one-third of an entity’s revenue comes from the sale of food or beverages being consumed on-site.

Required Documentation

The following documents should be prepared for those entities entitled to RRF grants:

  • An application form and the IRS Form 4506-T.
  • Applicants in operation before January 1, 2019, must supply gross receipts for both 2019 and 2020
  • Applicants in operation through part of 2019 must supply gross receipts for both 2019 and 2020
  • Applicants that began operations on or between January 1, 2020, and March 10, 2021, and applicants that have not yet opened as of March 11, 2021, but have incurred eligible expenses, must supply documentation of both gross receipts and eligible expenses for the length of time in operation.
  • Gross receipts and eligible expense documentation:
    – Business tax returns (IRS Form 1120 or IRS 1120-S)
    – IRS Forms 1040 Schedule C; IRS Forms 1040 Schedule F
    – IRS Form 1065 (including K-1s)
    – Bank statements
    – Financial statements such as income statements or profit and loss statements
    – Point of sale report(s), including IRS Form 1099-K

We will continue to monitor and provide updates on the RRF grant program as they are made available.

Connect With Us.

Kristin Metzger, CPA
Restaurant Practice Leader
kristin.metzger@wvco.com | 419.891.1040

Categories: COVID-19, Restaurant & Hospitality

Restaurant Revitalization Fund – Updated 4/1/21

Apr 01, 2021

The Restaurant Revitalization Fund (RRF) which provides federal grants to the hardest hit sector of the economy during COVID-19 is about to become a reality. President Biden is expected to sign a $1.9 trillion relief package, the American Rescue Plan today. As part of this plan $28.6 billion has been allocated to small and mid-sized restaurants for The Restaurant Revitalization Fund.

What is this new program?

The Restaurant Revitalization Fund allows eligible businesses to receive grants equal to their pandemic-related revenue loss, with a maximum of $10 million per business entity, or $5 million per physical location. How much you receive depends on the revenue your business lost due to the pandemic and if it received a PPP loan.

Businesses that were established before January 1, 2019, can calculate their grant amount by subtracting your 2020 gross receipts from your 2019 gross receipts. Businesses that were established during 2019 can receive a grant equal to the difference between:

  • Average monthly 2019 gross receipts, multiplied by 12
  • Average monthly 2020 gross receipts, multiplied by 12

Businesses that were established on or after January 1, 2020, can receive a grant equal to eligible payroll expenses, minus gross receipts from that year.

Who is eligible?

Eligible businesses include any location where patrons gather for the purposes of being served food and beverages: restaurants, bars, caterers, lounges, inns, taverns, saloons, brew pups, taprooms, tasting rooms, food trucks, food carts, or food stands.

Who is not eligible?

  • Restaurant chains that, together with affiliated businesses, own or operate more than 20 locations as of March 13, 2020
  • Restaurants that have a pending application for or have received a grant for shuttered venue operations
  • Publicly-traded companies, or
  • State or local government-operated businesses.

What can the grant funds be used for?

  • Payroll costs
  • Rent payments (excluding pre-payments)
  • Utilities
  • Principal and interest payments on a mortgage (excluding pre-payments)
  • Maintenance expenses including construction to accommodate outdoor seating and walls, floods, deck surfaces, furniture and fixtures, and equipment
  • Supplies (including PPE)
  • Food and beverage expenses
  • Covered supplier costs
  • Operational expenses
  • Paid sick leave
  • Any other expenses that the SBA deems essential to maintaining the eligible business

How and when can you apply for the grant?

Much like the Paycheck Protection Program, the Restaurant Revitalization Fund grants will be distributed by the Small Business Administration. Applications will be available on their website in the coming days. During the first 21 days of the fund launching, the SBA will give priority to restaurants owned and operated by veterans, women, or socially and economically disadvantaged individuals. If after 60 days, the funds have been exhausted, the SBA will have the discretion to administer grants to eligible businesses without regard to annual gross receipts.

Updates:

4/1/2021

During a Senate Small Business Committee hearing, senior SBA official Patrick Kelley confirmed the U.S. Small Business Administration (SBA) is targeting early April to launch a phased rollout of the $28.6 billion Restaurant Revitalization Fund (RRF). In addition, state restaurant associations have been meeting with Congressional leaders to learn more about details regarding applications, etc.

Key updates resulting from these  meetings include:

  • SBA will likely start posting relevant qualifications, instructions, and other information for restaurant operators over the next 7-10 days and give guidance on supporting documents needed to apply
  • SBA will open applications in April
  • SBA is currently planning the whole process will take place over the next 30-45 days
  • SBA also confirmed applicants for the  Fund program will not need to register for a DUNS number or on SAM.gov.
  • The process is slow on account that the SBA has to build a technology platform from scratch with the capability of dealing with the crush of applications and likely automating the process so it’s as efficient as possible. Once it’s up and running, the grants will function like direct payments to the applicants. The SBA is also in talks with third-party POS vendors to discuss accessing relevant sales data needed for application processing

We will continue to provide updates as the SBA releases additional guidance. Please check back periodically as we will post updates here.

Connect With Us.

Kristin Metzger, CPA

Restaurant Practice Leader

kristin.metzger@wvco.com | 419.891.1040

Categories: COVID-19, Restaurant & Hospitality

Potential Fraud in Economic Injury Disaster Loan Program (EIDL) Program

Nov 03, 2020

The Small Business Association (SBA) issued a report back in July 2020 stating ‘serious concerns’ of potential fraud related to the EIDL Program. The SBA’s inspector general raised red flags about more than $78 billion in aid approved for businesses under the agency’s program — about 37% percent of the total amount distributed — and warned billions might have been fraudulently obtained by individuals taking out loans on behalf of companies.
WVC has received reports of this happening in Northwest Ohio. Fraudsters have taken loans out on behalf of companies and it isn’t until those companies apply for a legitimate new loan or go through a bank review are the fraudulent EIDL loans discovered.

As of today, the Federal Trade Commission has calculated $170 million in fraud losses related to COVID-19 of which roughly $2 million has occurred in Ohio and $3 million in Michigan. Cybercriminals began capitalizing on the ever-changing pandemic from the moment it began. It is unfortunate to hear, but a reality of the world we live in today.

As fraudsters exploit the ongoing pandemic, we wanted to share with you the suggested steps our in-house Risk Services Leader, Tiffany Pollard, recommends should you find yourself in a similar position:

  1. Work directly with the banking institution which experienced the fraudulent EIDL transaction and inquire if they will provide coverage for credit monitoring; and,
  2. Review the FTC website with recommendations on what to do when your personally identifiable data has been compromised:
    a. https://www.identitytheft.gov/Steps
    b. https://www.identitytheft.gov/Info-Lost-or-Stolen

To prevent such fraud, here are some recommendations you can do now:

  • Activate credit monitoring at the three credit bureaus for your business and personal credit.
  • Work with your banking institution to ensure you are using the available financial transaction monitoring available to detect fraud.
  • Ensure you have cybersecurity and identity theft expense reimbursement insurance. Cybersecurity and identity theft insurance can help you pay for expenses associated with resulting losses and provide tools to reduce the risk of additional fraud.
  • Complete a Security Assessment by an independent cybersecurity team. This evaluates current information technology systems to identify vulnerabilities and review the dark web for possible user name and password loss. Completing a preventative assessment can give you peace-of-mind knowing you have mitigated vulnerabilities within your network.

Having plans in place before such an issue occurs will enable your business to confidently manage such a tense situation. If you have any questions, please reach out to your WVC Advisor to Tiffany Pollard directly. WVC is here to help you.

Tiffany Pollard, CISA
Risk Services Practice Leader, William Vaughan Company
Tiffany.pollard@wvco.com | 419.891.1040

Categories: COVID-19