How to Apply for and Receive Restaurant Relief Funds
This article was last updated on April 27, 2021 with more current information.
Federal relief for restaurants is one step closer. The Small Business Administration has announced that restaurant owners and operators can register for the SBA application portal (https://restaurants.sba.gov) beginning Friday, April 30 at 9 a.m. ET. The actual application opens on Monday, May 3 at noon ET. Industry groups like the National Restaurant Association and the Independent Restaurant Coalition are encouraging everyone to register and apply for relief as soon as possible.
On March 11, President Biden signed the American Rescue Plan, which included $28.6 billion in grants for independent restaurants as part of the RESTAURANTS act, an aggressive relief effort that the Independent Restaurant Coalition (IRC) lobbied for since last year. (Read more details of the plan in our coverage here). Here's what we know so far about how and when funds will be distributed:
When will restaurant grants be given out?
Both the IRC and National Restaurant Association estimate that official applications will become available late in April or in early May 2021.
(Food & Wine will update this section when more information becomes available.)
Who is giving out restaurant relief grants?
Restaurant owners can expect to apply directly to the SBA for grants, which can be used to cover eligible expenses incurred beginning February 15, 2020, through March 11, 2023. This is an extension of the previous time period.
Who is eligible for a restaurant relief grant?
Food and drink establishments that are not part of an affiliated group with more than 20 locations. This includes restaurants, caterers, cafes, brewpubs, food trucks, tasting rooms, and more. Franchise businesses are eligible for grants as long as they have fewer than 20 locations.
Publicly traded companies are not eligible. Businesses that have pending applications under the Shuttered Venue Operators Grant (a similar SBA-administered federal grant program for live entertainment venues) are also ineligible to apply for Restaurant Relief Funds. Businesses that have filed for bankruptcy are ineligible unless they are operating under an approved plan of reorganization.
For the first three weeks of open applications, the SBA will prioritize certain applications: those from women- and veteran-owned businesses, and those from socially and economically disadvantaged businesses. These are defined as “those who have been subjected to racial or ethnic prejudice or cultural bias because of their identity as a member of a group without regard to their individual qualities,” and, “those socially disadvantaged individuals whose ability to compete in the free enterprise system has been imparied due to diminished capital and credit opportunities as compared to others in the same business area.” Practically, according to guidance from the IRC, this includes: Black Americans, Hispanic Amerians, Native Americans, Asian Pacific Americans, and Subcontinent Asian Americans. Others not in these designated groups may establish social disadvantage based on race, ethinic origin, gender, and physical disability, according to the IRC’s guidance.
Businesses must have a 51 percent ownership stake from one of the groups above (so a 50-50 male-female partnership would not qualify based solely on its percentage of female ownership, for example). During the first 21 days of applications, any business can apply for relief, but only businesses that have self-certified that they meet the criteria of this priority group will be processed.
In a mid-April roundtable in partnership with the IRC, SBA associate administrator Patrick Kelley encouraged all businesses to apply as soon as possible, as the funds are expected to run out.
How do restaurants apply for a relief grant?
When it's ready, restaurants can find the application at restaurants.sba.gov. The SBA released a sample application via downloadable PDF. Some point-of-sale systems including Aloha, Clover, Square, and Toast are approved by the SBA to provide relevant sales data directly, which means restaurants should be able to apply for relief directly through these systems.
That's a welcome change, as these processes could have taken days for businesses to complete. (A how-to since removed from the IRC's site was five pages long.) Chris Macksey, of Prix Fixe Accounting in Berkshire, Massachusetts, even considered becoming a notary to avoid the added frustration of helping his clients find one.
Businesses that opened in 2020 are eligible to receive grants under the new law even if they weren't eligible for either round of PPP funds. Five of Macksey's 35 restaurant clients fall into that category. Across the country, close to 69,000 restaurants opened last year, according to Yelp's 2020 Economic Average Annual Report. Meanwhile, the National Restaurant Association estimates that 110,000 restaurants closed permanently or long-term as a result of the pandemic.
After the April 17 update from the SBA, Macksey said he's "really pleased with how it turned out," though he's still worried about the application process for his clients. "The one thing that has me really nervous is the application portal. All of the major programs they have launched ran into a lot of issues. The EIDL crashed three times, the SVOG [Shuttered Venue Operators Grant] was down for over a week."
What documents are needed to file for restaurant relief?
In most cases, the grant amount is calculated based on the difference between business in 2019 and 2020. A business will need to know its 2019 gross receipts as reported on a 2019 tax return. It’ll also need to know 2020 gross receipts “as reported or to be reported on a 2020 Federal tax return.” This amount should not include the amounts of other Covid-era loans, including the SBA Economic Injury Disaster Loans (EIDL) and state or local small business grants.
In addition to basic identifying information like tax ID numbers and ownership information, businesses will need to share the amount of PPP funds received in each draw, including identifying loan numbers.
Barb Leung, head of operations at New York’s Nom Wah, said she was happy to finally see guidance from the SBA. Advocacy groups like the IRC and National Restaurant Association have done a good job sharing what restaurants might expect from the process, but a business can only do so much without official SBA guidance, she said. “It’s a challenge because you don’t want to spend entire hours watching things you might know already, or try to piece together information that might already be outdated or changing because the SBA is trying to adjust and accommodate,” she said.
Leung even created her own guide to applying for federal relief in an effort to fully understand the process that she shared with friends and colleagues via a newsletter.
"In terms of disbursement of funds, I'm neither optimistic or pessimistic," she said. "We do need the aid but we've all been waiting so long, if we can wait a little bit longer and all hold tight and let SBA do its job and get it right the first time and organize everything... then, awesome." Both the Independent Restaurant Coalition and the National Restaurant Association have previously shared frequently asked questions and other guidance to help restaurant owners and operators prepare to access funds.
(Food & Wine will continue to update this article as new information becomes available.)