We can help with the process of the Restaurant Revitalization Fund – preparing the paperwork, applying for the fund, and following up. We’re fully caught up with the most recently updated rules and guidelines. Contact us today at (213) 383-1127 for assistance with the Restaurant Revitalization Fund, so you can get the fund you need for your restaurants.

SBA Administrator Isabella Casillas Guzman announced on April 17 that “help is here” for the restaurants and bars across the country devastated by the pandemic. The restaurant industry has been among the hardest-hit sectors during the economic downturn caused by the COVID-19 pandemic. SBA will provide funding up to 5 million dollars per location, not to exceed 10 million dollars total for the Applicant and any affiliated businesses. 

Read our articles below to understand your eligibility and more important details about the Restaurant Revitalization Fund.

4/19/21 – Restaurant Revitalization Fund – Who has Priority & Risks You Might Face

Last Saturday, April 17^th, the applications and details for the Restaurant Revitalization Fund were finally made public.

Today we’re going to be talking about 2 main areas – who will get priority in this application process with example cases and the risks of providing false information.  The application form was finally made public, but the portal to actually apply for the funds still isn’t.

First, let’s talk about what will happen once the application portal is made public. Once the portal opens, the SBA will be given priority for the first 21 days to specific groups. There are 3 groups of restaurants that are primarily owned by, 1^st women, 2^nd  veterans, or 3^rd socially or economically disadvantaged individuals. These groups’ ownership of the restaurant must make up at least 51%.  These terms and percentages sound confusing but let me explain what they mean and give you a few examples.

Socially disadvantaged means individuals who have been subjected to racial or ethnic prejudice or cultural bias because of their identity.  Those include Asian Pacific Americans, Hispanic Americans, Black Americans, and so on.

Economically disadvantaged means individuals whose ability to compete in the free enterprise system has been impaired due to diminished capital and credit opportunities compared to others in the same business. The SBA considers you economically disadvantaged if you meet any of the following 3 criteria.

1^st, your net worth is below $750,000, 2^nd, the average of your adjusted gross income over the last three years is not over $350,000, or 3^rd, if the fair market value of your assets exceeds $6 million. If you are above any of these thresholds, you are not deemed economically disadvantaged.

Now let’s talk about some examples.

Let’s say your restaurant has 5 owners and they each own 20%. If two owners are veterans and one is economically disadvantaged, this means 60% of your restaurant is owned by these priority groups and you would pass this 51% ownership threshold.

Let’s say, instead of three of the individuals being in these groups, only one owner was both a woman and a veteran. That means that you would not meet the 51% threshold and thus would not be given priority by the SBA.

Now let’s talk about the rules the SBA has set for this application process. Along with the required documents and application, the SBA also requires self-certification for all applicants. The main items that the owners must certify are that the business is not permanently closed, that the uncertainty the business is experiencing makes the funds necessary, and that you will use the funds on eligible expenses within the time period allowed. You also must certify that you do not own or operate more than 20 locations, you have not applied for or received a Shuttered Venue Operator grant, and that your restaurant is not publically traded. There are a few more specific statements that you must self-certify for and these are available on the SBA site. You will also have to sign a statement saying that the information and documents in your application are all true and accurate.

If you make any false statements in this application, you could be in serious trouble. This trouble includes imprisonment or hefty fines.

4/16/21 – Restaurant Revitalization Fund – Portal to Open Very Soon. Application Released!

4/13/21 – Restaurant Revitalization Grant – SBA’s Must-Know Updates!

Did your restaurant business suffer from the pandemic? Then these are some important updates that could help.

We know these RRFs are for restaurants that have lost business and customers because of the pandemic. If you are already familiar with what the grant is, I’m sure you’re wondering what these updates mean for you. We’ll talk about that in a second but first, let’s talk about the specifics about who is and isn’t eligible for the funds.

These grants are available to any place whose main purpose is to serve food and drinks to customers. The list of places that are eligible includes restaurants, food stands, food trucks, bars, bakeries, wineries, inns, etc.

There is also limited eligibility for some restaurants. The eligibility for these restaurants is limited if the restaurant has less than 33% of gross receipts from food and drinks that are consumed on site. Restaurants that are NOT eligible for these grants are restaurants that are nonprofits, permanently closed, owned by the government or state, or have filed for bankruptcy. Restaurants whose revenue was more in 2020 than 2019 are also not eligible. If the restaurant is publically traded, has received a Shuttered Venues Operations Grant, or has a pending application then the restaurant will not be eligible too.

Next let’s now talk about how the amount of the funds. These funds are equal to your pandemic-related revenue loss minus any PPP loans you restaurant got. This amount is slightly different depending on when your business was opened. Restaurants opened before 2019, restaurants opened during 2019, and restaurants opened during 2020 through 2021 will all have different equations to calculate the amount of the restaurant’s grant.  But, the EIDL advanced grants and target advanced grants are not subtracted from any RRF grant amount.

The proposed minimum amount a restaurant will receive is $1,000 and the proposed maximum amount is $5 million per location and $10 million total.

The main update on these RRFs is about the time period that you have to use them in.  Before the updates, you had to use the funds before December 31^st, 2021 or return the unused money. The proposed new end date of the covered period is March 11, 2023.  That means if this proposal is finalized, the period will be extended by 14 months.

Are you interested in applying for your business? Then let’s briefly talk about the application process.

The SBA plans to award grants in the order in which applications were received with priority is given to specific groups. When you apply, you need to submit the application, an IRS Form 4506-T, and documentation of your business’s gross receipts.  The documentation could include a copy of the business’s tax return, point of sale reports, financial statements, etc.

The SBA has previously announced that you DO NOT need a DUNS number or to register at www.SAM.gov in order to apply for the funds. However, an alternative method on how to apply has not yet been announced by the SBA.

These funds are given out on a first-come-first-served basis. Since this is such a new process with lots of ongoing changes, it is important that you complete the application process quickly and with a professional’s help so your restaurant can get these funds as quickly as possible.

Although the application has not yet been released, we can anticipate that the application process will be tricky. It is wise to get help and prepare and plan for this process ahead of time.

3/20/21 – What You Need to Know About The New Restaurant Revitalization Grant and Tax Relief Strategies

With the ongoing COVID-19 pandemic, many businesses have been greatly impacted, including the restaurant industry. We’re going to be talking about the newly-passed restaurant revitalization fund and restaurant tax relief strategies. Since the restaurant industry has lost so much business during these times, there are now new funds and tax relief programs that are available to these businesses. This includes a $5 billion fund for restaurants with gross receipts of $500,000 or less in 2019, and $23.6 billion grants of up to $10 million for restaurants. You might be wondering how these grants and funds are taxed.

The grant amount will differ, based on the business’s revenue-loss that is associated with COVID. There are different ways to calculate this pandemic-related revenue loss, depending on when the business was opened. If the business was operating in 2019, partially or for the entire year, the grant amount would be, the 2020 average monthly gross receipts multiplied by 12, subtracted from 2019 average monthly gross receipts multiplied by 12. There are different calculations if the business newly opened anytime between January 1, 2020 and the enactment date of the bill (March 11, 2021). Also note that the amounts will be reduced by the SBA loans, including the PPP loans.

So where can the restaurant owners use this fund? They mainly include payroll costs, paid sick leaves, mortgage, rent and utilities, maintenance, supplies, food and beverage expenses, operational expenses, and others. The grant is supposed to be used for expenses covering period between February 15, 2020, and December 31, 2021.

Now let’s talk about the taxes associated with these new programs.

The Restaurant Revitalization Grants are not subject to income tax. Your business should not include the grant amount as gross income on your tax return.

The grant has been a much-needed life support for the troubled industry. Followed by the pandemic, the restaurant industry was perhaps the most impacted by lockdowns, with the ongoing burden of having to remit tax payments.

Payroll taxes, for one, continue to be a pressing cause of concern for the restaurant industry. If the IRS thinks that if someone was responsible for filing or paying taxes but did not, then he or she will become liable for the unpaid taxes.

When the business struggles, restaurant owners are tempted to use these funds to cover the business expenses. The IRS takes late payroll tax payments very seriously because it wasn’t ever the business owners’ money to begin with.

If you didn’t try to resolve your taxes for years, serious consequences can occur to your business.  The IRS has the power to levy your bank accounts, seize income or properties. They can also assert the Trust Fund Recovery Penalty by going after you personally, or even close your business. They’ll try everything to collect back taxes from your business.

3/13/21 – Newly-Passed Restaurant Revitalization Fund and Restaurant Tax Relief Strategies

Restaurant Revitalization Fund and Grants

Along with small and medium enterprises, the restaurant industry has also been severely impacted by the pandemic. However, the governments have been trying to ensure that tax reliefs are provided to help the restaurant industry. This has been effectively encapsulated in the Restaurant Revitalization Act signed on March 11.

$5 billion of the fund will be available to eligible restaurants with gross receipts during 2019 of $500,000 or less.

In addition, the crux of this particular tax relief regime provides grants to restaurant applicants of up to $10 million. This is mainly to compensate them for the pandemic-related revenue loss. In this aspect, all restaurants are declared as eligible for the program, with some exceptions, like restaurants that are operated by a state or a local government or are owned by a publicly traded company. However, it is to be noted that the grant that would be awarded to the entity is not supposed to exceed an aggregate of $10 million and should be limited to $5 million per physical location.

The grant amount will be based on the pandemic-related revenue loss. If the entity was in business for 2019, either entirely or partially, the loss is calculated as the 2020 average monthly gross receipts multiplied by 12, subtracted from 2019 average monthly gross receipts multiplied by 12. A different calculation method is to be applied if the business newly opened anytime between January 1, 2020, and the enactment date of the bill, March 11, 2021.  The grant will be reduced by the 7(a) SBA loans, including PPP loans received.

Under this particular act, there are certain expenses that are eligible for restaurants. They mainly include payroll costs, paid sick leaves, mortgage, rent and utilities, maintenance, supplies, food and beverage expenses, operational expenses, and any other expenses SBA deemed essential. In the same manner, the grant is supposed to be used for expenses that fall within the covered period between February 15, 2020, and December 31, 2021.

Taxability

Restaurant Revitalization Grants that are received are not subject to income tax. In the same manner, the exclusion will not result in the denial of a deduction reduction of tax attributes or a denial of increase in basis. This implies that these businesses are not supposed to include the grant amount as a gross income in the tax return.

Tax Problems for Restaurant Owners

Restaurant Revitalization Grant has been a much-needed life support for the troubled industry. Followed by the pandemic, the restaurant industry was perhaps the most impacted by lockdowns, with the ongoing burden of having to remit tax payments. Payroll taxes, for one, continue to be a pressing cause of concern for the restaurant industry.

When their business struggles, restaurant owners are tempted to use these funds to cover the business expenses. The IRS takes late payroll tax payments very seriously because it wasn’t the business owners’ money to begin with. If the IRS thinks that if an individual was responsible for filing or paying taxes but did not, then he or she becomes liable for the unpaid taxes.

Business owners must realize that the IRS has the power to close their business, come after the owner personally by asserting Trust Fund Recovery Penalty, levy bank accounts, or seize income sources and properties in an attempt to collect back taxes.  Also, their passport may be revoked or declined to issue or renew by the U.S. Department of State.

Tax Reliefs for the Restaurant Industry

In the case where the business is approached by the IRS for back taxes, the best possible course of action might be to adopt an approach to tactfully deal with the issue, without panicking.

The best course of action is to see if they qualify for any tax relief options. However, this can only be done after delinquent tax returns have been filed and all current income tax and payroll tax deposits have been paid.

Businesses or individuals can settle their taxes for substantially less than they owe through an Offer in Compromise if they qualify. Financial inability to pay is the most common reason an Offer is accepted, but it must be supported by and verified with well-prepared financial documents and statements.

Or, through an Installment Agreement, businesses or individuals may set up an affordable payment plan to pay off the back taxes. If they qualify for a “Partial Payment” Installment, they will not be paying off the full amount, as the balance left at the end of the payment term will be forgiven. Strategizing is crucial when submitting an application in order to maximize the benefit.

Also, they may be able to halt IRS collection actions by declaring a Currently Not Collectible status. To qualify for this status, they must prove they have a dire financial situation and none to very little income. The IRS will put a pause on their attempt to collect payment until the financial situation improves.