# SBA Restaurant Revitalization Fund Grants > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/crs%3AIF11819 ## Record - **Collection:** Congressional research report - **Document type:** CRS In Focus - **Published:** August 15, 2022 - **Citation:** IF11819 ## Text 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 Disclaimer This document was prepared by the Congressional Research Service (CRS). CRS serves as nonpartisan shared staff to congressional committees and Members of Congress. It operates solely at the behest of and under the direction of Congress. Information in a CRS Report should not be relied upon for purposes other than public understanding of information that has been provided by CRS to Members of Congress in connection with CRS’s institutional role. CRS Reports, as a work of the United States Government, are not subject to copyright protection in the United States. Any CRS Report may be reproduced and distributed in its entirety without permission from CRS. However, as a CRS Report may include copyrighted images or material from a third party, you may need to obtain the permission of the copyright holder if you wish to copy or otherwise use copyrighted material. https://crsreports.congress.gov | IF11819 · VERSION 14 · UPDATED --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/crs%3AIF11819. Public record. Not legal advice.