SBA Restaurant Revitalization Fund Grants (IF11819, Version 9, Updated September 29, 2021)
Summary
This Congressional Research Service Insight, IF11819 Version 9, updated September 29, 2021, covers the closed $28.6 billion Restaurant Revitalization Fund. The SBA announced the closure on July 2, 2021 and says that as of June 30, 2021 it had received more than 278,000 eligible applications requesting over $72.2 billion and had provided grants to approximately 101,000 applicants. Underserved populations received approximately $18 billion of the awards, about $7 billion of it to women-owned businesses. Three lawsuits over the 21-day priority period led courts to rule the race and gender prioritization unconstitutional. Bills (H.R. 3807 and S. 2091 among them) have been introduced to provide the fund additional money.
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Updated September 29, 2021
SBA Restaurant Revitalization Fund Grants
The Small Business Administration’s (SBA’s) $28.6 billion $500,000 and to distribute the remaining $23.6 billion in an
Restaurant Revitalization Fund Program (RRF) was equitable manner to applicants of different sizes based on
authorized by P.L. 117-2, the American Rescue Plan Act of annual gross receipts. To meet this latter directive, the SBA
2021. The RRF provided grants of up to $5 million per set aside an additional $4 billion for applicants with 2019
permanent physical business location (not to exceed $10 gross receipts from $500,001 to $1.5 million and an
million per applicant and any affiliated businesses) to additional $500 million for applicants with 2019 gross
restaurants and other similar places of business that had receipts of not more than $50,000 “to ensure that the
experienced COVID-19-related revenue loss. Unlike most smallest businesses and those in underserved communities
other SBA programs, there was no limit on the number of receive funding.”
employees for businesses to qualify for a RRF grant.
The SBA also was required to provide priority to small
This Insight summarizes the statutory provisions enacted by businesses owned and controlled by women, veterans, and
P.L. 117-2 and SBA-issued guidance on the RRF. For more socially and economically disadvantaged individuals and to
information, see the SBA’s “Restaurant Revitalization award grants only to these prioritized groups during the
Funding Program Guide.” initial 21 days that the program was operational. The SBA
announced that during this period, it would accept
Eligibility Rules applications from all eligible applicants but would
RRF grants were designed to assist applicants in remaining distribute funds only to applicants that self-certified their
open or reopening. Permanently closed businesses were not eligibility as a prioritized group. Thereafter, the SBA would
eligible, and temporarily closed businesses were required to distribute grants in the order in which they were approved.
reopen soon, with eligible expenses incurred by March 11,
2021, at the latest. An applicant’s grant award was equal to the amount of
COVID-19-related revenue loss (up to the program’s limits)
To qualify for the RRF, for-profit businesses (together with the applicant experienced, as determined by formulas. In
their affiliated businesses) may not have owned or operated the SBA’s RRF Program Guide, these formulas varied, in
more than 20 locations as of March 13, 2020, regardless of part, based on the date an eligible entity began operations
whether those locations do business under the same or (e.g., the date it started sales). Separate formulas
multiple names. P.L. 117-2 provided that, for the purposes determined grant amounts for applicants that began
of the RRF, a business is affiliated with another if it has an operations on or before January 1, 2019; partially through
equity or right to profit distributions of not less than 50% or 2019; on or between January 1, 2020, and March 10, 2021,
if an eligible entity has the contractual authority to control or applicants that had not yet opened for sales but, as of
the direction of the business. March 11, 2021, had incurred eligible expenses. The SBA’s
RRF Program Guide contains step-by-step calculation
Other entities not eligible for the RRF included state or instructions.
local government-operated businesses, an entity that had
received or had a pending application for the SBA’s For example, entities that began operations on or before
Shuttered Venue Operators Grant program, nonprofit January 1, 2019, could receive the difference between their
organizations, and publicly traded companies. Certain gross receipts as reported on 2019 and 2020 federal income
businesses that had filed for bankruptcy also were tax returns, excluding any amounts received from a list of
ineligible. specified sources (including the SBA’s PPP, Economic
Injury Disaster Loan [EIDL] Program, EIDL Advance
The SBA also required RRF applicants to certify that Payment Program, Targeted EIDL Program, and debt relief
“current economic uncertainty [made] this funding request payments). If the applicant received a PPP loan or EIDL,
necessary to support the ongoing or anticipated operations.” those amounts were subtracted from the RRF grant amount.
This certification, which was first required on applications
for SBA’s Paycheck Protection Program (PPP) loans, has Eligible Expenses
been subject to evolving agency guidance. In the PPP Grant proceeds may be used for
context, SBA requires that the borrower pass a “business
activity assessment” and a “liquidity assessment,” each of business payroll costs (including sick leave);
which require detailed responses on SBA Form 3059.
business utility payments;
Grant Amounts
P.L. 117-2 required the SBA to set aside $5 billion for business debt service (not including any prepayment of
applicants with 2019 gross receipts of not more than principal or interest);
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SBA Restaurant Revitalization Fund Grants
business maintenance expenses; Between May 3, 2021, and May 24, 2021, the SBA
processed applications from priority groups and held
outdoor seating construction; applications from non-priority applicants but retained their
place in the processing queue based on the order in which
business supplies (including protective equipment and the applications were filed. On May 25, 2021, the SBA
cleaning materials); began processing all non-priority applications with FY2019
gross revenue less than $50,000. On May 27, 2021, the
business food and beverage expenses (including raw SBA began processing non-priority applicants on a first-
materials); come, first-served basis.
covered supplier costs; and As of May 26, 2021, the SBA had received more than
372,000 applications requesting over $76 billion in funds
business operating expenses. and had distributed about $16 billion to more than 63,000
applicants.
RRF funds must be used by March 11, 2023, on eligible
expenses incurred beginning February 15, 2020, and ending On July 2, 2021, the SBA announced the RRF’s closure.
March 11, 2023. Unused funds must be returned to the The RRF application portal remained open until July 14,
SBA. 2021, to allow applicants to check their status, address
payment corrections, or ask questions. The SBA also
RRF recipients are required to report their spending announced that, as of June 30, 2021, it had received more
(whether complete or not) by December 31, 2021, and than 278,000 eligible applications requesting over $72.2
certify that the proceeds were used on eligible expenses. billion in grants and had provided grants to approximately
More information on this certification process likely will be 101,000 applicants. Underserved populations received
detailed in future SBA regulations and guidance. approximately $18 billion of the $28.6 billion in grant
awards, including about $7 billion to women-owned
Applications Exceed $76 Billion businesses, $6.7 billion to businesses owned by socially and
The SBA completed a seven-day pilot test period for the economically disadvantaged individuals, $2.8 billion to
RRF application portal to identify and address any technical businesses owned by representatives of multiple
issues prior to the portal’s opening, which took place at underserved populations, and $1 billion to veteran-owned
noon on May 3, 2021. Participants in the pilot were businesses.
randomly selected from existing PPP borrowers in priority
groups for the RRF. These participants did not receive RRF Legal Challenges
funds until the application portal was opened to the public. After the SBA launched the RRF, three lawsuits were filed
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 court rulings, the SBA sent letters to
million from businesses with not more than $50,000 in 2,965 priority RRF applicants who had been notified that
revenue (the set-aside for this group was at least $500 their applications had been approved but had not yet
million), $8.14 billion from businesses with revenue of not received their grant funds, informing them that the agency
more than $500,000 (the set-aside for this group was at “will not be able to disburse your Restaurant Revitalization
least $5 billion), and $15.1 billion from businesses with Fund award.” Instead, those approvals will be paid only
revenue of $500,001 to $1.5 million (the set-aside for this once the SBA completes processing all previously filed
group was at least an additional $4 billion). non-priority applications and only if the RRF is not first
exhausted.
Because the demand from applicants exceeded the RRF’s
budgetary authority, the SBA closed the application portal Legislation
to most applicants. Applications were accepted until May Legislation has been introduced (H.R. 3807, S. 2091, and S.
24 from applicants with revenue up to $50,000 because the 2675) to provide the RRF additional funding.
budget authority set aside for these applicants had not yet
been exhausted. Robert Jay Dilger, Senior Specialist in American National
Government
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SBA Restaurant Revitalization Fund Grants
IF11819
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https://crsreports.congress.gov | IF11819 · VERSION 9 · UPDATED
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