The National Restaurant Association has released a guide for restaurants and bars that applied for and successfully received a Restaurant Revitalization Fund grant, which opened on May 3, including records to maintain and keep track of and learning how to address new funds in tax filings.
Thus far, demand far outstrips available funds, and the U.S. Small Business Administration has already received 266,000 applications representing over $65 billion in requested funds, more than twice the amount that is currently available.
This week, 27,000 applicants will start seeing their awarded funds in their bank accounts and foodservice operators want to know what they should do next once they get approved. Here’s what the National Restaurant Association suggests:
Keep a copy of all submitted records, including the application itself
Keep all financial forms, business records and the application itself on-hand for reference.
Don’t throw away records that were not submitted
The SBA will be looking for proof of how long a restaurant has been open for and you’ll want to keep all receipts on hand, even if they were not necessary for your application. These records might include:
- Evidence that supports when the business opened/began making sales.
- How the grant was calculated
- Documentation that proves/asserts that applicant as part of a priority group (if relevant)
- Information regarding affiliated businesses
- Information regarding ownership shares
Protect your SBA information and passwords
Make sure usernames/passwords are easily accessible to you as the applicant, but is sufficiently secure
Make a plan for how the grant money will be spent
The Restaurant Revitalization Fund has specific rules on what the funds can be used for, as detailed here. You must return the funds if you were considering using the money for something outside of those jurisdictions. Remember that the RRF can only be used to pay off principal and interest payments of a debt, and not the entire debt. Payroll expenses can only be paid only if employees earn $100,000 per year.
The National Restaurant Association suggests that operators create a budget so that every dollar can be easily tracked. The SBA is also allegedly going to require recipients to fill out a “Use of Funds” validation assessment due by the end of the year, so this organization is vital.
Make sure your planned expenses fit within the timeline of Feb. 2020 to March 2023
This is the approved timeline (and back payment) for the Restaurant Revitalization Fund.
Know how your taxes will be filed after receiving a grant
RRF grants are not subject to federal income taxes, but not all states conform to federal tax code so it’s important to understand how your state will be categorizing the Restaurant Revitalization Fund grants. More information should be available via individual state restaurant associations.
All applicants should prepare for public reporting requirements
The Freedom of Information Act or other transparency requirements could oblige the SBA to divulge business information of all grant recipients, like business names and funds received.
As for how grant recipients should spend the funds once they’re approved?
“First of all, everyone needs to pay their back bills,” Dina Samson, cofounder of the Independent Hospitality Coalition told Restaurant Hospitality. “Also, they should be trying to get some outdoor space secured for themselves. I think this is key to expand their footprint and have more seats and add square footage to their restaurant.”
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