SBA Restaurant Revitalization Fund Grants (Congressional Research Service IF11819, updated August 15, 2022)

Summary

This Congressional Research Service In Focus (IF11819), updated August 15, 2022, describes the SBA's $28.6 billion Restaurant Revitalization Fund, created by the American Rescue Plan Act of 2021, which paid grants equal to COVID-19-related revenue loss of up to $5 million per location and $10 million per applicant. For the first 21 days the SBA paid only businesses owned by women, veterans and socially and economically disadvantaged individuals; federal courts, including a Sixth Circuit panel, held the race and gender priority unconstitutional, and the SBA wrote to 2,965 approved priority applicants that it 'will not be able to disburse' their awards. As of June 30, 2021 the SBA had received more than 278,000 eligible applications requesting over $72.2 billion and had funded approximately 101,000 applicants. The House-passed H.R. 3807 would provide $42 billion to replenish the fund.

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Updated August 15, 2022
SBA Restaurant Revitalization Fund Grants
The Small Business Administration’s (SBA’s) $28.6 billion socially and economically disadvantaged individuals and to
Restaurant Revitalization Fund Program (RRF) was award grants only to these prioritized groups during the
authorized by P.L. 117-2, the American Rescue Plan Act of initial 21 days that the program was operational. The SBA
2021. The RRF provided grants of up to $5 million per announced that during this period, it would accept
permanent physical business location (not to exceed $10 applications from all eligible applicants but would
million per applicant and any affiliated businesses) to distribute funds only to applicants that self-certified their
restaurants and other similar places of business that had eligibility as a prioritized group. Thereafter, the SBA would
experienced COVID-19-related revenue loss. Unlike most distribute grants in the order in which they were approved.
other SBA programs, there was no limit on the number of
An applicant’s grant award equaled the amount of COVID-
employees for businesses to qualify for a RRF grant.
19-related revenue loss (up to the program’s limits) the
This In Focus summarizes the statutory provisions enacted applicant experienced, as determined by formulas. In the
by P.L. 117-2 and SBA-issued guidance on the RRF. For SBA’s RRF Program Guide, these formulas varied, in part,
more information, see the SBA’s “Restaurant Revitalization based on the date an eligible entity began operations (e.g.,
Funding Program Guide.” the date it started sales). Separate formulas determined
grant amounts for applicants that began operations on or
Eligibility Rules before January 1, 2019; partially through 2019; on or
RRF grants were designed to assist applicants in remaining between January 1, 2020, and March 10, 2021, or had not
open or reopening. Permanently closed businesses were not yet opened for sales but, as of March 11, 2021, had incurred
eligible, and temporarily closed businesses were required to eligible expenses. The SBA’s RRF Program Guide contains
reopen soon, with eligible expenses incurred by March 11, step-by-step calculation instructions.
2021, at the latest.
For example, entities that began operations on or before
To qualify for the RRF, for-profit businesses (and affiliated January 1, 2019, could receive the difference between their
businesses) may not have owned or operated more than 20 gross receipts as reported on 2019 and 2020 federal income
locations as of March 13, 2020, regardless of whether those tax returns, excluding any amounts received from a list of
locations do business under the same or multiple names. specified sources (including the SBA’s PPP, Economic
For RRF purposes, a business is affiliated with another if it Injury Disaster Loan [EIDL] Program, EIDL Advance
has an equity or right to profit distributions of at least 50% Payment Program, Targeted EIDL Program, and debt relief
or if an eligible entity has contractual authority to control payments). If the applicant received a PPP loan or EIDL,
the business’s direction. those amounts were subtracted from the RRF grant amount.
Other ineligible entities included state or local government- Eligible Expenses
operated businesses, an entity that had received or had a
Grant proceeds may be used for
pending application for the SBA’s Shuttered Venue
Operators Grant program, nonprofit organizations, and  business payroll costs (including sick leave),
publicly traded companies. Certain businesses that had filed  business utility payments,
for bankruptcy also were ineligible.
 business debt service (not including any prepayment of
The SBA required RRF applicants to certify that current principal or interest),
economic uncertainty made this funding request “necessary  business maintenance expenses,
to support the ongoing or anticipated operations.”
 outdoor seating construction,
Grant Amounts  business supplies (including protective equipment and
P.L. 117-2 required the SBA to set aside $5 billion for cleaning materials),
applicants with 2019 gross receipts of not more than  business food and beverage expenses (including raw
$500,000 and to distribute the remaining $23.6 billion in an materials),
equitable manner to applicants of different sizes based on  covered supplier costs, and
annual gross receipts. The SBA set aside an additional $4  business operating expenses.
billion for applicants with 2019 gross receipts from
$500,001 to $1.5 million and an additional $500 million for RRF funds must be used by March 11, 2023, on eligible
applicants with 2019 gross receipts of not more than expenses incurred between February 15, 2020, and March
$50,000 “to ensure that the smallest businesses and those in 11, 2023. Unused funds must be returned to the SBA.
underserved communities receive funding.”
RRF recipients were required to submit a first spending
The SBA also was required to provide priority to small report (whether complete or not) by December 31, 2021,
businesses owned and controlled by women, veterans, and 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, billion of the $28.6 billion in grant awards, including about
must file another report by December 31, 2022; recipients $7 billion to women-owned businesses, $6.7 billion to
with funds remaining on December 31, 2022, must file a businesses owned by socially and economically
report by April 30, 2023. The SBA requested comments on disadvantaged individuals, $2.8 billion to businesses owned
the RRF spending certification process on July 15, 2022. by representatives of multiple underserved populations, and
$1 billion to veteran-owned businesses.
Applications Exceed $76 Billion In an August 9, 2022, letter, 73 Members of Congress asked
The SBA completed a seven-day pilot test period for the
the SBA Administrator to award the RRF’s remaining
RRF application portal to identify and address any technical
unobligated funds. The RRF had nearly $180 million in
issues prior to the portal’s opening, which took place at
noon on May 3, 2021. Participants in the pilot were unobligated funds as of August 2022.
randomly selected from existing PPP borrowers in priority
groups for the RRF. These participants did not receive RRF
Legal Challenges
After the SBA launched the RRF, three lawsuits were filed
funds until the application portal was opened to the public.
challenging the constitutionality of the RRF’s 21-day
RRF applications were submitted through a recognized priority application period. Federal courts, including a
SBA Restaurant Partner (SBA-specified technology three-judge panel of the U.S. Court of Appeals for the Sixth
companies that serve the restaurant industry) or directly on Circuit, ruled against the SBA in each of these lawsuits.
the SBA website. Applicants needing assistance preparing The courts held that the SBA’s prioritization of RRF funds
their applications were directed to contact their local SBA on the basis of social disadvantage because of race and
district office or call the SBA’s call center support number gender was unconstitutional under the Equal Protection
at 1-844-279-8898. Clause. The court ordered the SBA to fund the plaintiffs’
grant applications, if approved, before all later-filed
On May 12, 2021, the SBA announced it had received more applications, without regard to processing time or the
than 266,000 applications requesting over $65 billion in
applicants’ race or gender. The court decisions did not
funds, far greater than its $28.6 billion authorized amount.
affect the SBA’s prioritization for veteran-owned
Nearly half of the applications were submitted by women,
businesses in accordance with the law.
veterans, and socially and economically disadvantaged
business owners. The SBA received requests for $330 In response to these rulings, the SBA sent letters to 2,965
million from businesses with not more than $50,000 in priority RRF applicants who had been notified that their
revenue (the set-aside for this group was at least $500 applications had been approved but had not yet received
million), $8.14 billion from businesses with revenue of not their grant funds, informing them that the agency “will not
more than $500,000 (the set-aside for this group was at be able to disburse your Restaurant Revitalization Fund
least $5 billion), and $15.1 billion from businesses with award.” Instead, those approvals will be paid only once the
revenue of $500,001 to $1.5 million (the set-aside for this SBA completes processing all previously filed non-priority
group was at least an additional $4 billion). applications and only if the RRF is not first exhausted.
Because demand from applicants exceeded the RRF’s Legislation
budgetary authority, the SBA closed the application portal On April 7, 2022, the House passed H.R. 3807, the
to most applicants. Applications were accepted until May Restaurant Revitalization Fund Replenishment Act of 2021.
24 from applicants with revenue up to $50,000 because the The bill would provide $42 billion to replenish the RRF.
budget authority set aside for these applicants had not yet Priority is to be provided to previous RRF applicants that
been exhausted. did not receive an award. The bill also would provide $13
billion for a Hard Hit Industries Award Program for small
Between May 3, 2021, and May 24, 2021, the SBA
businesses with not more than 200 employees that suffered
processed applications from priority groups and held
revenue loss of at least 40% during the pandemic. These
applications from non-priority applicants but retained their awards are to be made without regard to what industries
place in the processing queue based on the order in which
they operate in, with grants capped at $1 million each. First
the applications were filed. On May 25, 2021, the SBA
priority is to be provided to businesses that have
began processing all non-priority applications with FY2019 experienced pandemic-related revenue loss of at least 80%.
gross revenue less than $50,000. On May 27, 2021, the
Second priority is to be provided to businesses that have
SBA began processing non-priority applicants on a first-
experienced pandemic-related revenue loss of at least 60%.
come, first-served basis.
On May 19, 2022, cloture on a motion to proceed to
As of May 26, 2021, the SBA received more than 372,000
consider S. 4008, the Small Business COVID Relief Act of
applications requesting over $76 billion in funds and
2022, was not invoked by a 52-43 vote in the Senate (60
distributed about $16 billion to over 63,000 applicants. votes were necessary). The bill would have provided $40
On July 2, 2021, the SBA announced the RRF’s closure. billion to replenish the RRF and $8 billion for specified
The application portal remained open until July 14, 2021, to types of small businesses, including fitness centers, minor
allow applicants to check their status, address payment league sports teams, and live venue service providers.
corrections, or ask questions. The SBA also announced that,
Several other RRF-related bills of interest include H.R.
as of June 30, 2021, it had received more than 278,000
4568, H.R. 7407, S. 255, and S. 2091.
eligible applications requesting over $72.2 billion in grants
and had provided grants to approximately 101,000 Adam G. Levin, Analyst in Economic Development Policy
applicants. Underserved populations received about $18

https://crsreports.congress.gov
SBA Restaurant Revitalization Fund Grants

IF11819

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