What is the Restaurant Revitalization Fund?

The Restaurant Revitalization Fund is part of the American Rescue Plan, that was signed into law on March 11, 2021. This special provision provides funds upwards of $10 million per business. These funds are forgivable providing your business meets certain criteria. The program is being administering by the SBA (Small Business Administration).

The Erika Record team is back with an overview of the Restaurants Revitalization Fund (RRF) and how it can potentially help bakeries, restaurants, and other food establishments obtain funds that are desperately needed for operations, payroll, equipment purchasing, etc. As part of our commitment to you, we reviewed a variety of different resources to better understand how this new SBA (Small Business Administration) program directly applies to bakeries and other food establishments.

What is the Restaurant Revitalization Fund?

The Restaurant Revitalization Fund is part of the American Rescue Plan, that was signed into law on March 11, 2021. This special provision provides funds upwards of $10 million per business. These funds are forgivable providing your business meets certain criteria. The program is being administering by the SBA (Small Business Administration).

The Erika Record team is back with an overview of the Restaurants Revitalization Fund (RRF) and how it can potentially help bakeries, restaurants, and other food establishments obtain funds that are desperately needed for operations, payroll, equipment purchasing, etc. As part of our commitment to you, we reviewed a variety of different resources to better understand how this new SBA (Small Business Administration) program directly applies to bakeries and other food establishments.

Is My Bakery Eligible?

There is a good chance your bakery is eligible! A wide variety of food establishments are eligible to receive funding providing they meet specific criteria. Bakeries must provide proof that 33% of gross revenue in 2019 were from on-site sales.

For this program, on-site sales are considered sales of food or beverages under the following conditions:

• Consumed on the bakery’s premises
• Purchased to-go at the bakery’s premise (take-out orders)
• Purchased online and picked up from the bakery’s premise (website and app-based ordering)
• Delivered directly to a consumer (home deliveries)
• Wholesale orders and wholesale accounts do not count towards the 33% gross revenue mandate.
  • If your bakery has wholesale business, you may still be eligible providing 33% or more of gross revenue was generated from direct-to-consumer sales.

In addition, special priority will be given to businesses that are at least 51% owned by key target groups. This includes women owned businesses, veteran owned businesses, and businesses that are owned by socially or economically disadvantaged individuals, please refer to the SBA for additional information.

Qualifying bakeries must also be established within the United States. Additional documentation and criteria may apply.

How Much Funding Can My Bakery Receive?

The Small Business Administration (SBA) is providing qualifying bakeries and other food establishments with up to $5,000,000 (per location) and $10,000,000 per business entity (with more than one location). The minimum amount awarded will be $1,000.

Can I Purchase Bakery Equipment with These Funds?

Per guidance provided by the SBA, bakery equipment would appear to be covered under the following eligible funds categories:

• Business maintenance expenses (including equipment)
• Business operating expenses, defined as business expenses incurred through normal business operations which are necessary and mandatory for the business (including equipment)

Based on this guidance, maintenance of existing bakery equipment and/or purchasing of new bakery equipment that is essential to your production and operation, is considered a covered eligible expense.

How Is Funding for My Bakery Calculated?

Funding is calculated based on three key sets of criteria.
1. The length of time your bakery or food establishment has been in operation:

• • This is the main category that will be used to determine your eligibility.
  • There are three categories:
    1. Established Before 2019
    2. Established During 2019
       • Applicants who were established during 2019, may elect to use the Established During 2019 calculation or Established During 2020 or 2021 calculation at their discretion.
    3. Established During 2020 or 2021
    4. Applicants with multiple locations
    • Based on guidance released on 4/28/2021, these applicants should use the qualifying calculation categories (business established timeframes) as defined above for each location, and then aggregate the totals.
    • Please note that funding is limited to $5 million/location with a maximum of $10 million for the entire entity/business operation.

2. Your gross receipts and/or eligible expenses:

• This would be the total revenue your business received.
• You must have this amount for the years specified within the calculation guidelines.

3. Deduction of any PPP (Paycheck Protection Program) loan amounts awarded:

• This includes all funds awarded as part of the PPP program. For example, if you were awarded an initial PPP loan and then re-applied for a second round of funding, both loan amounts would need to be deducted.
• This excludes any funds repaid on or before 5/18/2020 per the PPP safe harbor agreement.

The calculation guidelines below are for informational purposes only. Per SBA guidance, certain government loans, grants, and/or assistance do not count towards gross receipts. We strongly advise that you consult with your accounting professional for further guidance. Eligible funding amounts are subject to the terms and conditions as mandated by the SBA, and may differ from the eligibility amounts obtained using the formulas used below.

Calculation Sheets

Erika Record Baking Equipment remains dedicated to your success. Throughout the past year, we have provided tools and resources designed to help your bakery and/or food establishment navigate the pandemic via our #ERCares initiative. This includes our helpful calculation sheet designed to help you determine your potential eligible funding amount from the Restaurants Revitalization Fund grant program. The amount calculated will serve only as an estimate and is subject to verification and approval by the SBA (Small Business Administration). These calculations also assume your bakery meets all eligibility criteria. We recommend consulting with your accounting professional for further guidance.

Are Other Expenses Eligible

Per guidance provided by the SBA, eligible expense categories include the following:

• Business Payroll
• Business Mortgage or Rent
• Business Debt Service
• Business Utilities
• Business Maintenance
• Construction of Outdoor Seating
• Business Supplies (Including Protection Equipment & Cleaning)
• Business Food & Beverages (Including Raw Materials)
• Supplier Costs
• Business Operating Expenses (Including Equipment)
• Eligible Past Due Expenses

A more in-depth of explanation of this criteria can be found within the SBA guidelines. We also recommend consulting with your accounting professional regarding any specific questions related to determining eligible expenses for your bakery.

Does My Bakery Have to Repay These Funds? Does It Count as Income?

Per guidance provided by the SBA, the terms and conditions applied towards these funds include and may not be limited to:

• Based on guidance received as of 4/20/2021, RRF (Restaurant Revitalization Funds) will be considered grants.
• These grants will not be included as federal taxable gross income by the IRS.
• These grants may be considered taxable based on your state’s tax code.
• These grants are not subject to repayment providing all terms and conditions are met.

• All funds must be used by March 11, 2023 to cover eligible expenses incurred beginning February 15, 2020 – March 11, 2023.
• Should the business close, the covered period will end either when the business closes or March 11, 2023 (whichever occurs first).
• Any unused funds that were not used towards eligible expense by March 11, 2023, must be returned to the federal government (repayment of unused funds).
• Applicants that use all funds prior to December 31, 2021 must certify in the application portal that all funds were used towards eligible expenses.
• Applicants that have funds remaining after December 31, 2021 must complete annual reporting submission until all funds are spent and/or the coverage period expires. The SBA may also request supporting documentation.
• Additional terms and conditions may apply.

How Will My Bakery Receive These Funds?

All funds will be disbursed directly by the SBA (Small Business Administration) into the applicant’s commercial banking account.

How Does My Bakery Apply?

Registration for the SBA application portal will begin on Friday, April 30, 2021 at 9:00 AM EST. Applications will open beginning Monday, May 3, 2021 at 12:00 PM EST. Registration can be completed at: https://restaurants.sba.gov/. The portal is currently in the process of accepting invitation only pilot registrations.

1. Applicants may apply through their SBA-recognized Point of Sales (POS) vendors or via the SBA portal link provided above.

• SBA-recognized POS vendors includes: Square, Toast, Clover, NCR Corporation (Aloha)
• If working with an authorized vendor, you DO NOT need to pre-register on the SBA application portal.
• Unlike PPP (Paycheck Protection Program) funding, applicants WILL NOT be able to apply via their preferred banking institution.

2. Applicants must submit required documentation:

• 1. IRS Form 4506-T (signed and completed by applicant)
  2. Gross Receipts Documentation:
  • Business tax returns (IRS Form 1120 or IRS 1120-S)
  • IRS Forms 1040 Schedule C; IRS Forms 1040 Schedule F
  3. For a partnerships:
  • The partnership’s IRS Form 1065 (including K-1s)
  4. Bank statements
  5. Externally or internally prepared financial statements such as Income Statements or Profit and Loss Statements
  6. Point of sale report(s), including IRS Form 1099-K

  3. Bakeries must also provide the following additional documentation:

  • Documents evidencing that onsite sales to the public comprise at least 33.00% of gross receipts for 2019. This may include:
  • Tax and Trade Bureau (TTB) Forms 5130.9 or TTB.
  • For businesses who opened in 2020, the Applicant’s original business model should have contemplated at least 33.00% of gross receipts in onsite sales to the public.

Resources

Below are a variety of different resources that can help bakery owners and other food establishment proprietors determine how to best navigate this opportunity.