SBA Restaurant Revitalization Fund Grants

Updated August 15, 2022

SBA Restaurant Revitalization Fund Grants

The Small Business Administration’s (SBA’s) $28.6 billion

Restaurant Revitalization Fund Program (RRF) was

authorized by P.L. 117-2, the American Rescue Plan Act of

2021. The RRF provided grants of up to $5 million per

permanent physical business location (not to exceed $10

million per applicant and any affiliated businesses) to

restaurants and other similar places of business that had

experienced COVID-19-related revenue loss. Unlike most

other SBA programs, there was no limit on the number of

employees for businesses to qualify for a RRF grant.

This In Focus summarizes the statutory provisions enacted

by P.L. 117-2 and SBA-issued guidance on the RRF. For

more information, see the SBA’s “Restaurant Revitalization

Funding Program Guide.”

Eligibility Rules

RRF grants were designed to assist applicants in remaining

open or reopening. Permanently closed businesses were not

eligible, and temporarily closed businesses were required to

reopen soon, with eligible expenses incurred by March 11,

2021, at the latest.

To qualify for the RRF, for-profit businesses (and affiliated

businesses) may not have owned or operated more than 20

locations as of March 13, 2020, regardless of whether those

locations do business under the same or multiple names.

For RRF purposes, a business is affiliated with another if it

has an equity or right to profit distributions of at least 50%

or if an eligible entity has contractual authority to control

the business’s direction.

Other ineligible entities included state or local governmentoperated businesses, an entity that had received or had a

pending application for the SBA’s Shuttered Venue

Operators Grant program, nonprofit organizations, and

publicly traded companies. Certain businesses that had filed

for bankruptcy also were ineligible.

The SBA required RRF applicants to certify that current

economic uncertainty made this funding request “necessary

to support the ongoing or anticipated operations.”

Grant Amounts

P.L. 117-2 required the SBA to set aside $5 billion for

applicants with 2019 gross receipts of not more than

$500,000 and to distribute the remaining $23.6 billion in an

equitable manner to applicants of different sizes based on

annual gross receipts. The SBA set aside an additional $4

billion for applicants with 2019 gross receipts from

$500,001 to $1.5 million and an additional $500 million for

applicants with 2019 gross receipts of not more than

$50,000 “to ensure that the smallest businesses and those in

underserved communities receive funding.”

The SBA also was required to provide priority to small

businesses owned and controlled by women, veterans, and

socially and economically disadvantaged individuals and to

award grants only to these prioritized groups during the

initial 21 days that the program was operational. The SBA

announced that during this period, it would accept

applications from all eligible applicants but would

distribute funds only to applicants that self-certified their

eligibility as a prioritized group. Thereafter, the SBA would

distribute grants in the order in which they were approved.

An applicant’s grant award equaled the amount of COVID19-related revenue loss (up to the program’s limits) the

applicant experienced, as determined by formulas. In the

SBA’s RRF Program Guide, these formulas varied, in part,

based on the date an eligible entity began operations (e.g.,

the date it started sales). Separate formulas determined

grant amounts for applicants that began operations on or

before January 1, 2019; partially through 2019; on or

between January 1, 2020, and March 10, 2021, or had not

yet opened for sales but, as of March 11, 2021, had incurred

eligible expenses. The SBA’s RRF Program Guide contains

step-by-step calculation instructions.

For example, entities that began operations on or before

January 1, 2019, could receive the difference between their

gross receipts as reported on 2019 and 2020 federal income

tax returns, excluding any amounts received from a list of

specified sources (including the SBA’s PPP, Economic

Injury Disaster Loan [EIDL] Program, EIDL Advance

Payment Program, Targeted EIDL Program, and debt relief

payments). If the applicant received a PPP loan or EIDL,

those amounts were subtracted from the RRF grant amount.

Eligible Expenses

Grant proceeds may be used for

 business payroll costs (including sick leave),

 business utility payments,

 business debt service (not including any prepayment of

principal or interest),

 business maintenance expenses,

 outdoor seating construction,

 business supplies (including protective equipment and

cleaning materials),

 business food and beverage expenses (including raw

materials),

 covered supplier costs, and

 business operating expenses.

RRF funds must be used by March 11, 2023, on eligible

expenses incurred between February 15, 2020, and March

11, 2023. Unused funds must be returned to the SBA.

RRF recipients were required to submit a first spending

report (whether complete or not) by December 31, 2021,

and certify that proceeds were used on eligible expenses.

https://crsreports.congress.gov

SBA Restaurant Revitalization Fund Grants

Recipients with funds remaining on December 31, 2021,

must file another report by December 31, 2022; recipients

with funds remaining on December 31, 2022, must file a

report by April 30, 2023. The SBA requested comments on

the RRF spending certification process on July 15, 2022.

Applications Exceed $76 Billion

The SBA completed a seven-day pilot test period for the

RRF application portal to identify and address any technical

issues prior to the portal’s opening, which took place at

noon on May 3, 2021. Participants in the pilot were

randomly selected from existing PPP borrowers in priority

groups for the RRF. These participants did not receive RRF

funds until the application portal was opened to the public.

RRF applications were submitted through a recognized

SBA Restaurant Partner (SBA-specified technology

companies that serve the restaurant industry) or directly on

the SBA website. Applicants needing assistance preparing

their applications were directed to contact their local SBA

district office or call the SBA’s call center support number

at 1-844-279-8898.

On May 12, 2021, the SBA announced it had received more

than 266,000 applications requesting over $65 billion in

funds, far greater than its $28.6 billion authorized amount.

Nearly half of the applications were submitted by women,

veterans, and socially and economically disadvantaged

business owners. The SBA received requests for $330

million from businesses with not more than $50,000 in

revenue (the set-aside for this group was at least $500

million), $8.14 billion from businesses with revenue of not

more than $500,000 (the set-aside for this group was at

least $5 billion), and $15.1 billion from businesses with

revenue of $500,001 to $1.5 million (the set-aside for this

group was at least an additional $4 billion).

Because demand from applicants exceeded the RRF’s

budgetary authority, the SBA closed the application portal

to most applicants. Applications were accepted until May

24 from applicants with revenue up to $50,000 because the

budget authority set aside for these applicants had not yet

been exhausted.

Between May 3, 2021, and May 24, 2021, the SBA

processed applications from priority groups and held

applications from non-priority applicants but retained their

place in the processing queue based on the order in which

the applications were filed. On May 25, 2021, the SBA

began processing all non-priority applications with FY2019

gross revenue less than $50,000. On May 27, 2021, the

SBA began processing non-priority applicants on a firstcome, first-served basis.

As of May 26, 2021, the SBA received more than 372,000

applications requesting over $76 billion in funds and

distributed about $16 billion to over 63,000 applicants.

On July 2, 2021, the SBA announced the RRF’s closure.

The application portal remained open until July 14, 2021, to

allow applicants to check their status, address payment

corrections, or ask questions. The SBA also announced that,

as of June 30, 2021, it had received more than 278,000

eligible applications requesting over $72.2 billion in grants

and had provided grants to approximately 101,000

applicants. Underserved populations received about $18

billion of the $28.6 billion in grant awards, including about

$7 billion to women-owned businesses, $6.7 billion to

businesses owned by socially and economically

disadvantaged individuals, $2.8 billion to businesses owned

by representatives of multiple underserved populations, and

$1 billion to veteran-owned businesses.

In an August 9, 2022, letter, 73 Members of Congress asked

the SBA Administrator to award the RRF’s remaining

unobligated funds. The RRF had nearly $180 million in

unobligated funds as of August 2022.

Legal Challenges

After the SBA launched the RRF, three lawsuits were filed

challenging the constitutionality of the RRF’s 21-day

priority application period. Federal courts, including a

three-judge panel of the U.S. Court of Appeals for the Sixth

Circuit, ruled against the SBA in each of these lawsuits.

The courts held that the SBA’s prioritization of RRF funds

on the basis of social disadvantage because of race and

gender was unconstitutional under the Equal Protection

Clause. The court ordered the SBA to fund the plaintiffs’

grant applications, if approved, before all later-filed

applications, without regard to processing time or the

applicants’ race or gender. The court decisions did not

affect the SBA’s prioritization for veteran-owned

businesses in accordance with the law.

In response to these rulings, the SBA sent letters to 2,965

priority RRF applicants who had been notified that their

applications had been approved but had not yet received

their grant funds, informing them that the agency “will not

be able to disburse your Restaurant Revitalization Fund

award.” Instead, those approvals will be paid only once the

SBA completes processing all previously filed non-priority

applications and only if the RRF is not first exhausted.

Legislation

On April 7, 2022, the House passed H.R. 3807, the

Restaurant Revitalization Fund Replenishment Act of 2021.

The bill would provide $42 billion to replenish the RRF.

Priority is to be provided to previous RRF applicants that

did not receive an award. The bill also would provide $13

billion for a Hard Hit Industries Award Program for small

businesses with not more than 200 employees that suffered

revenue loss of at least 40% during the pandemic. These

awards are to be made without regard to what industries

they operate in, with grants capped at $1 million each. First

priority is to be provided to businesses that have

experienced pandemic-related revenue loss of at least 80%.

Second priority is to be provided to businesses that have

experienced pandemic-related revenue loss of at least 60%.

On May 19, 2022, cloture on a motion to proceed to

consider S. 4008, the Small Business COVID Relief Act of

2022, was not invoked by a 52-43 vote in the Senate (60

votes were necessary). The bill would have provided $40

billion to replenish the RRF and $8 billion for specified

types of small businesses, including fitness centers, minor

league sports teams, and live venue service providers.

Several other RRF-related bills of interest include H.R.

4568, H.R. 7407, S. 255, and S. 2091.

Adam G. Levin, Analyst in Economic Development Policy

https://crsreports.congress.gov

SBA Restaurant Revitalization Fund Grants

IF11819

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