5 key takeaways from our expert-led RRF webinar

The Small Business Administration this week opened the floodgates for a massive money pool meant especially for food and drink businesses. The $28.6 billion Restaurant Relief Fund, or RRF, began taking applications on May 3, once the SBA set its rules and procedures for this first-time direct grant program aimed at helping restaurants weather the effects of the Covid-19 pandemic.

To help independent restaurant operators navigate this application process quickly and (hopefully) painlessly, on Tuesday we teamed up with our pals at Gordon Food Service to present a panel conversation on the the best strategies for restaurateurs vying for their share of those federal funds. The panelists:

Missed the stream? Don't sweat it, watch the whole thing back on GFS' Facebook page right here. And stay in the loop on future events like this by subscribing to Eat.News, a free weekly newsletter curated by our editorial team for independent restaurant operators.

We've broken out some of the key discussion points from the webinar below. But one general piece advice that panelists had for business owners was to move quickly if you want a chance at this round of funding. While $28.6B is a huge amount of money (nearly the GDP of Vermont, to put it in some perspective) it represents only about a tenth of what the restaurant industry estimates the pandemic cost American food and beverage operators. 

Demand, in short, is going to outstrip supply. So speed is of the essence. Here’s what you need to know about how to dive in, how to protect yourself in case of a review or audit, and what comes after the money runs out.

What makes RRF different from PPP?

These two little acronyms are huge for restaurateurs. We’ll see how the RRF plays out, but in short it’s a grant program that will cover an array of different costs your restaurant may have incurred in the past year and going forward into the designated usage period (about two years). 

By contrast, the Payroll Protection Program in 2020 aimed primarily at keeping your payroll whole and getting workers paid. While many of those loans will likely be forgiven, the breadth and flexibility of RRF still sets it apart, as well as its specificity to the food and beverage industry.

“You want to use PPP for payroll expenses, because you need to spend 60% for payroll, and try to use RRF more widely,” said Erik Daly, an attorney with Miller Johnson in Grand Rapids, Michigan. “When you go to apply for forgiveness on a PPP loan, you want to include mostly payroll expenses.”

The RRF is also learning from the PPP frenzy and putting in some more anti-fraud measures upfront. For instance, Daly said, the SBA is going to want to deposit funds into a bank account that has been around for at least three months, whereas PPP loans could go into a new account.

How do I apply for an RRF grant?

Through the SBA’s application portal. There’s some prep you need to do to interface with the federal grants systems, but on the bright side, the SBA has tried to streamline the process by partnering with POS systems that can auto-fill and certify your financial information.

“A lot of the ecosystem partners were working with the SBA to create an application flow, since we had a lot of data for our small businesses,” said Ola Williams, the head of federal policy at Square. “So they wouldn’t have to make it such a laborious and manual process.”

The RRF application will ask, for instance, whether an operator received a PPP loan. Square clients who drew their PPP funds using Square Capital as the lender will find that information pre-loaded when they use Square to apply for RRF. Save you some paper-shuffling, at least.

But you don’t need to use Square or one of the other POS systems in the RRF’s ecosystem to apply. Touch Bistro, for instance, isn’t among those systems, but it’s still helping its clients to get their materials in order to apply. Primarily you’re going to need financial statements that show how much money you were making in 2018, 2019, and 2020. 

“We’re urging operators to reach out to their accountant, reach out to their lawyer. Get your application in as soon as possible,” said Ismene Tsaconakos, the director of integrated partnerships at Touch Bistro. “Please gather your documentation in advance. You can submit in 30 minutes or less if everything goes smoothly.”

Once your application is in, the POS operators said, you should plan to direct any questions about payments to the SBA directly.

How will the SBA decide who gets money?

One criticism of the PPP was that many loans went to large businesses that didn’t really need the loans to survive the year. RRF is addressing those concerns by setting aside funds for smaller operators. It’s also giving first priority to three groups of owners for the first 21 days of the program: women, veterans, and people from traditionally economically disadvantaged groups or areas.

You can (and should) still apply as soon as possible, even if you’re not in a priority group, Daly said. Because once the priority period ends on May 24, it’s first-come, first-serve for the rest of the money.

Where will the pain points be?

A few seem likely. The big one is if your business opened after 2018, you won’t have two full years of revenue to contrast, so you’ll have to use a different funding calculator show your need. There’s yet a third funding calculator for anyone whose restaurant hasn’t yet opened but can still be shown to be hurt by the pandemic. Daly recommends that you get a “comfort letter” from your accountant in those events, to help support your claims.

There’s also going to be a bit more work required if you have multiple locations, some of which may have opened before or since 2018. There’s a hybrid calculator for you, in that case, but it will get more involved.

Once you do have funds, be sure to keep track of where they’re going. “Even if you’ve been pretty informal with your bookkeeping in the past, this is a case where you want to keep good records,” Daly said. “Keep those records, even after you’ve submitted them to the SBA. You just want to keep a good record and be able to sleep well at night if that audit or review should ever come.”

What happens when the money runs out?

Well, on this round, that’s it. Once the allocation is through, the big money pot will be empty.

Whether there’s more money in the future for RRF will be up to lawmakers. If the program is successful, runs smoothly, and generates the sort of good will and positive headlines that lawmakers so enjoy, there’s reason to hope there could be more funding later.

“In terms of funds and availability, put pressure on Congress,” Williams said. “That’s where the source is. We’re hoping that Congress will add more funds — $28.6 billion is not enough for the entire country. Restaurants are vital to our economy.”

Politically, Daly said, spending programs like this tend to be more bipartisan once they’re standalone issues rather than components of a large, politically charged law. The RRF was just one part of the American Rescue Plan Act, a $1.9 trillion stimulus that passed the House and the Senate without a single Republican vote. But Republican lawmakers have been touting the RRF to their constituents on Twitter and elsewhere, suggesting that if the RRF were to need more funds, it might be more popular on a second turn through Congress.

“I’m optimistic that if the funding does dry up too quickly, the program can be replenished at least to make sure that every legitimate operator who’s eligible has the chance to participate,” Daly said.

[Photo: Christian Hume via Unsplash]