Buffalo Business First Takes A Look At The RRF

We looked at the Restaurant Revitalization Fund draft application. Here’s what you need to know.

The Small Business Administration is fleshing out details of its $28.6 billion Restaurant Revitalization Fund ahead of what it said would be a late April launch — complete with what appears to be a draft of the proposed application for business owners.

The draft application is accompanied by a letter from SBA Office of Financial Assistance Director Dianna Seaborn asking for emergency review of the materials. The SBA did not respond to requests for comment about the draft, but the agency had said in congressional hearings in March that it would race to roll out the grant program by the end of April.

Justin Elanjian, partner-in-charge of the Paycheck Protection Program and the Employee Retention Credit program at Atlanta accounting and advisory firm Aprio, said the draft application is typical of the SBA sending its documentation to the Office of Management and Budget for approval and looks entirely legitimate.

“It certainly looks and feels like this would make sense as to what the application is and appears to be a draft form of it,” Elanjian said. He added much of the document hews closely with what the agency has disclosed to trade groups and others about the breadth of the program.

For example, the SBA has maximized the “covered period” under which businesses can spend the grant proceeds through March 11, 2023. While the American Rescue Plan Act of 2021 identified a covered period of Feb. 15, 2020, to Dec. 31, 2021, it also gave the SBA the ability to craft a covered period not later than two years after the legislation was passed.

That means the SBA decided to maximize the time frame, avoiding earlier issues within the PPP that required Congress to repeatedly extend deadlines, Elanjian said

Much of the application also aligns with information released by trade groups and associations, including the National Restaurant Association, which has pushed to make sure the ultimate application is streamlined while also maintaining the integrity of the program, said Aaron Frazier, the association’s director of health care and tax policy.

“The application extends the covered period in a recognition that restaurants will need a long time to recover. By allowing that restaurant to carry the grant funds into 2022, it provides that really important bridge to a time period where on-premise activity can return,” Frazier said.

The draft application also provides more details on who gets priority to the first-come, first-serve program. Congress designated the first 21 days after the grant program opens for applications from businesses owned by women, people of color, veterans, or socially and economically disadvantaged small businesses.

The agency explicitly states in the apparent draft application that to be considered in one of these groups, ownership must be 51% from that group. The agency lays out an example of a business owned by five people equally, and only one is a veteran, owning just 20%. That would not be enough to qualify for priority, according to the draft.

But there are other, smaller details buried in the application. For brewpubs, tasting rooms or inns to qualify for the grant program, at least 33% of their gross receipts must come from on-site sales of food and beverages.

The application also makes it clear that any PPP proceeds are removed from the gross calculation of revenue for 2020. Since any amount of PPP received is automatically deducted from the maximum under this program, this avoids businesses being doubly penalized, Elanjian said.

A business must not be permanently closed to qualify. If it has declared bankruptcy but is under an approved reorganization plan, it is eligible, per the draft application. If there is no plan of reorganization or it filed for a liquidation, then it is no longer eligible.

The agency also estimated that it would take 45 minutes to complete the application, which is a combination of 30 minutes to gather the documents and 15 minutes to prepare and submit the form.

While the initial grant program is a good start, it is not enough, according to Frazier. The National Restaurant Association supports legislation in Congress that would boost that program’s total funding to about $120 billion — he said restaurants so far in the pandemic have lost about $270 billion in all.

“This program created a really important foundation, but it’s funded at $28.6 billion — which we are incredible grateful for — but it’s clear that the depths of economic devastation is not going to be fully met by this initial wave of funding,” Frazier said.

That means the money is likely to run out under the weight of the demand, both Frazier and Elanjian agreed.

“I can’t imagine how this is going to last,” Elanjian said.

Other small-business programs, mostly run by the SBA, continue to move forward, including the agency’s launch of its shuttered venue operators grant program, months after it was approved in December. SBA’s Targeted EIDL Advance is also slowly starting to go out the door, with the first few hundred businesses receiving money.

The agency also said it was more than tripling the maximum size of its Economic Injury Disaster Loans from six months’ worth of economic injury — or up to a maximum of $150,000 — to 24 months of economic injury with a maximum loan amount of $500,000. But it is also working to increase that new limit up to the $2 million statutory limit.