Source: RSM US LLP.
TAX ALERT |
On April 17, 2021 the SBA published two very important pieces of information for potential applicants to the Restaurant Revitalization Fund – a sample application and a program guide.
Confirming many of our prior thoughts, the SBA guidance provides more certainty on what is necessary for the application.
A few observations about the released guidance:
The Program Guide and sample application confirm the comments that the following businesses will need to demonstrate that onsite sales to the public comprise at least 33% of gross receipts.
- Bakeries
- Breweries and/or microbreweries
- Wineries
- Distilleries
Applicants should also be prepared with ownership information and affiliate information. The sample application requires disclosure of all owners with 20% or more of the equity of the Applicant. Importantly, if no owner has at least 20% ownership of the Applicant, enough owners must be listed to get to an at least 20% combined equity ownership of the Applicant.
Applicants should also gather information about any PPP loans received during 2020 and/or 2021. The sample applications requires the Applicant to provide both the amount received and the PPP loan number.
Helpfully, the sample application provides tables to assist in calculating gross receipts of the Applicant. For many applicants, gross receipts will come from the 2019 and 2020 income tax returns. As we provided previously, gross receipts are not to include amounts received from any PPP loan, SBA 7(a) debt relief payments, EIDL loan, EIDL advance, targeted EIDL advance or state and local small business grants. Applicants may wish to consult with their tax advisor on gross receipts.
Applicants that started operations between Jan. 1, 2020, and March 10, 2021, or applicants that have not yet opened, but have incurred eligible expenses calculate grant amounts using the amount spent on eligible expenses, which are the same expenses that are qualified uses of this grant money.
The Program Guide contains many helpful definitions for applicants, including the definition of gross receipts. In what should be simplification, the Program Guide cross-references the line items on the tax returns to report as the gross receipts (generally the gross receipts net of allowances number).
Also contained within the Program Guidance are three ways for applicants to apply. Through a recognized SBA Restaurant Partner (list to be released), through SBA directly at restaurants.sba.gov, and telephonically at (844) 279-8898.
We anticipate at least one additional update to the program guide before the program is live. Potential applicants, though, should utilize these SBA resources to prepare to apply.
This article was written by Mathew Talcoff, John Nicolopoulos, Tracy Burr, Ryan Corcoran and originally appeared on 2021-04-19.
2020 RSM US LLP. All rights reserved.
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