A $28.6 billion Restaurant Revitalization Fund (RRF) has been launched under the federal relief program by the U.S. Small Business Administration (SBA) and it has begun accepting grant applications to help put tens of thousands of restaurants on a long path to recovery, according to a statement by the National Restaurant Association or NRA. The fund will be administered by the SBA.
The new funding was created in just two months under the federal relief program by the SBA. This fund will help the hardest hit small and medium-sized restaurants kickstart their recovery.
The RRF is based on the Senate version of the $120 billion Restaurants Act and the original plan posed by the Association in March 2020. The Restaurants Act was introduced in Congress in June 2020 and passed by the House but was not voted on by the Senate.
The RRF was created after the passage of the $1.9 trillion American Rescue Plan. The Senate increased the amount of money for the RRF from the initially proposed $25 billion to $28.6 billion.
“Restaurants are operating in an uncertain environment, with continued needs to restore customer confidence in their safety and to bring workers back into the economy. We will continue to work with policymakers to secure a comprehensive set of solutions, including additional funding for the RRF,” NRA President & CEO Tom Bené said in a statement.
However, he added that, “The question on the minds of many is what happens when applications outpace the available funds.”
The RRF is earmarked for the restaurant industry in the form of tax-free grants of up to $5 million for individual restaurants and $10 million for restaurant groups with 20 or fewer locations. This grant need not be repaid as long as funds are used for eligible uses no later than March 11, 2023.
The restaurant industry has been the hardest hit during the pandemic, with restaurant and foodservice sales plunging $280 billion from expected levels and 110,000 restaurants closing down permanently between March 2020 and April 2021, according to NRA, which comprises 1 million restaurant and foodservice outlets and a workforce of 15.6 million employees.
This includes the sales shortfall at eating and drinking places, plus a sharp reduction in spending at foodservice operations in sectors such as lodging, arts/entertainment/recreation, education, healthcare and retail.
The NRA has been pursuing the industry-specific recovery grants for nearly 15 months. It encourages all eligible applicants to apply as soon as possible as the funds are limited.
The eligibility amount for the RRF will be determined by subtracting an applicant’s 2020 sales from its 2019 revenues. If the applicant received a PPP loan, the amount of the PPP loan will be subtracted from the eligible grant under RRF.
According to the latest data released by the NRA in mid-April, warmer weather and additional stimulus payments bolstered consumer spending in restaurants. However, the boost from the stimulus checks will wane in the coming months, while the restaurant industry’s road to recovery remains long.
Restaurant sales registered a robust increase in March, with total monthly sales rising more than $11 billion above the low registered in December 2020. Eating and drinking place sales in March remained more than $3 billion or 5 percent below their pre-pandemic level in February 2020.
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