SBA Restaurant Revitalization Fund Grants (IF11819, Version 6, Updated June 17, 2021)
Summary
This Congressional Research Service Insight, IF11819 Version 6, updated June 17, 2021, covers the $28.6 billion Restaurant Revitalization Fund. As of May 26, 2021 the SBA had received more than 372,000 applications requesting over $76 billion and had distributed about $16 billion to more than 63,000 applicants. Three lawsuits challenged the 21-day priority application period; federal courts, including a three-judge panel of the Sixth Circuit, ruled against the SBA, finding prioritization by social disadvantage because of race and gender unconstitutional under the Equal Protection Clause. The SBA then sent letters to 2,965 approved priority applicants saying it would not be able to disburse their awards, which would be paid only after earlier non-priority applications were processed and only if the fund was not exhausted.
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Updated June 17, 2021
SBA Restaurant Revitalization Fund Grants
The Small Business Administration’s (SBA’s) $28.6 billion context, SBA requires that the borrower pass a “business
Restaurant Revitalization Fund Program (RRF) was activity assessment” and a “liquidity assessment,” each of
authorized by P.L. 117-2, the American Rescue Plan Act of which require detailed responses on SBA Form 3059.
2021. The RRF provides grants of up to $5 million per
permanent physical business location (not to exceed $10 Grant Amounts
million per applicant and any affiliated businesses) to P.L. 117-2 requires the SBA to set aside $5 billion for
restaurants and other similar places of business “in which applicants with 2019 gross receipts of not more than
the public or patrons assemble for the primary purpose of $500,000 and to distribute the remaining $23.6 billion in an
being served food or drink” and which have experienced equitable manner to applicants of different sizes based on
COVID-19-related revenue loss. Unlike most other SBA annual gross receipts. To meet this latter directive, the SBA
programs, there is no limit on the number of employees for is setting aside an additional $4 billion for applicants with
businesses to qualify for a RRF grant. 2019 gross receipts from $500,001 to $1.5 million and an
additional $500 million for applicants with 2019 gross
This Insight summarizes the statutory provisions enacted by receipts of not more than $50,000 “to ensure that the
P.L. 117-2 and SBA-issued guidance on the RRF. For more smallest businesses and those in underserved communities
information, see the SBA’s “Restaurant Revitalization receive funding.”
Funding Program Guide.”
The SBA is also required to provide priority to small
Eligibility Rules businesses owned and controlled by women, veterans, and
RRF grants are designed to assist applicants in remaining socially and economically disadvantaged individuals and
open or reopening. Permanently closed businesses are not may award grants only to these prioritized groups during
eligible and temporarily closed businesses must reopen the initial 21 days that the program is operational. The SBA
soon, with eligible expenses incurred by March 11, 2021, at has announced that during this time period, it will accept
the latest. applications from all eligible applicants, but will distribute
funds only to applicants that self-certify their eligibility as a
To qualify for the RRF, for-profit businesses (together with prioritized group. Thereafter, grants will be distributed in
their affiliated businesses) may not have owned or operated the order in which they are approved by the SBA.
more than 20 locations as of March 13, 2020, regardless of
whether those locations do business under the same or An applicant’s grant award is equal to the amount of
multiple names. P.L. 117-2 provides that, for the purposes COVID-19-related revenue loss (up to the program’s limits)
of the RRF, a business is affiliated with another if it has an the applicant experienced, as determined by formulas. In
equity or right to profit distributions of not less than 50% or the SBA’s RRF Program Guide, these formulas vary, in
if an eligible entity has the contractual authority to control part, based on the date an eligible entity began operations
the direction of the business. (e.g., the date the entity started sales). Separate formulas
determine grant amounts for applicants that began
Other entities not eligible for the RRF include state or local operations on or before January 1, 2019; partially through
government-operated businesses, an entity that has received 2019; on or between January 1, 2020, and March 10, 2021;
or has a pending application for the SBA’s Shuttered Venue or have not yet opened for sales but, as of March 11, 2021,
Operators Grant program, nonprofit organizations, and have incurred eligible expenses. The SBA’s RRF Program
publicly traded companies. Certain businesses that have Guide contains step-by-step calculation instructions.
filed for bankruptcy are also ineligible.
For example, entities that began operations on or before
Although further SBA guidance could be necessary, it January 1, 2019, may receive the difference between their
would appear that franchises could be eligible for the RRF gross receipts as reported on their 2019 and 2020 federal
as long as they meet the affiliated business limit of 20 income tax returns, excluding any amounts received from a
locations and the franchises, themselves, are not publicly list of specified sources (this includes the SBA’s PPP,
traded. Economic Injury Disaster Loan (EIDL) Program, EIDL
Advance Payment Program, Targeted EIDL Program, and
The SBA also requires that a RRF applicant certify that, debt relief payments). If the applicant received a PPP loan
“current economic uncertainty makes this funding request or EIDL, those amounts will be subtracted from the RRF
necessary to support the ongoing or anticipated operations.” grant amount.
This certification, which was first required on applications
for SBA’s Paycheck Protection Program (PPP) loans, has
been subject to evolving agency guidance. In the PPP
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SBA Restaurant Revitalization Fund Grants
Eligible Expenses disadvantaged business owners. The SBA received requests
Grant proceeds may be used for for $330 million from businesses with not more than
$50,000 in revenue (the set-aside for this group is at least
business payroll costs (including sick leave); $500 million), $8.14 billion from businesses with revenue
of not more than $500,000 (the set-aside for this group is at
business mortgage obligation payments or rent least $5 billion), and $15.1 billion from businesses with
payments (not including prepayment of mortgage revenue of $500,001 to $1.5 million (the set-aside for this
principal or rent); group is at least an additional $4 billion). Because the
demand from applicants exceeds the RRF’s budgetary
business debt service (not including any prepayment of authority, the SBA closed the application portal to most
principal or interest); applicants. Applications were accepted until May 24 from
applicants with revenue up to $50,000 because the budget
business utility payments; authority set aside for these applicants had not yet been
exhausted.
business maintenance expenses;
Between May 3, 2021, and May 24, 2021, the SBA
outdoor seating construction; processed applications from priority groups and held
applications from non-priority applicants, but retained their
business supplies (including protective equipment and place in the processing queue based on the order in which
cleaning materials); the application was filed. On May 25, 2021, the SBA began
processing all non-priority applications with FY2019 gross
business food and beverage expenses (including raw revenue less than $50,000. On May 27, 2021, the SBA
materials); began processing non-priority applicants on a first-come,
first-served basis.
covered supplier costs; and
As of May 26, 2021, the SBA had received more than
business operating expenses. 372,000 applications requesting over $76 billion in funds
and had distributed about $16 billion to more than 63,000
RRF funds must be used by March 11, 2023, on eligible applicants.
expenses incurred beginning on February 15, 2020, and
ending on March 11, 2023. Any unused funds must be Legal Challenges
returned to the SBA. After the SBA launched the RRF, three lawsuits were filed
challenging the constitutionality of the RRF’s 21-day
RRF recipients are required to report their spending priority application period. Federal courts, including a
(whether complete or not) by December 31, 2021, and three-judge panel of the U.S. Court of Appeals for the Sixth
certify that the proceeds have been used on eligible Circuit, ruled against the SBA in each of these lawsuits.
expenses. More information on this certification process The courts held that the SBA’s prioritization of RRF funds
will likely be detailed in future SBA regulations and on the basis of social disadvantage because of race and
guidance. gender was unconstitutional under the Equal Protection
Clause. The court ordered the SBA to fund the plaintiffs’
Applications Exceed $76 Billion grant applications, if approved, before all later-filed
The SBA completed a 7-day pilot test period for the RRF applications, without regard to processing time or the
application portal to identify and address any technical applicants’ race or gender. The court decisions did not
issues prior to the portal’s opening, which took place at affect the SBA’s prioritization for veteran-owned
noon on May 3, 2021. Participants in the pilot were businesses in accordance with the law.
randomly selected from existing PPP borrowers in priority
groups for the RRF. These participants did not receive RRF In response to these court rulings, the SBA sent letters to
funds until the application portal was opened to the public. 2,965 priority RRF applicants who had been notified that
their applications had been approved, but had not yet
RRF applications may be submitted through a recognized received their grant funds, informing them that the agency
SBA Restaurant Partner (SBA-specified technology “will not be able to disburse your Restaurant Revitalization
companies that serve the restaurant industry) or directly on Fund award.” Instead, those approvals will only be paid
the SBA website. Applicants needing assistance preparing once the SBA completes processing all previously filed
their applications may contact their local SBA district office non-priority applications, and only if the RRF is not first
or call the SBA’s call center support number at 1-844-279- exhausted.
8898.
Robert Jay Dilger, Senior Specialist in American National
On May 12, 2021, the SBA announced that it had received Government
more than 266,000 applications requesting over $65 billion
Sean Lowry, Analyst in Public Finance
in funds, far greater than its $28.6 billion authorized
amount. Nearly half of the applications were submitted by IF11819
women, veterans, and socially and economically
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SBA Restaurant Revitalization Fund Grants
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https://crsreports.congress.gov | IF11819 · VERSION 6 · UPDATED
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