Filed under: Audit & Assurance, Hospitality

Update: The first RRF receipt report was due no later than December 31, 2021. The SBA anticipated that the majority of recipients would use all their funds prior to that date. If you did not spend all funds by December 31, 2021, you must file another report no later than December 31, 2022. If you do not spend all funds by December 31, 2022, the final report is due no later than April 30, 2023.

If you were one of the fortunate few to receive a Restaurant Revitalization Fund (RRF) grant, here are the top five post-award things to do:

1. Plan Your Spending

The funds can be used on the following eligible expenses incurred between February 15, 2020 and March 11, 2023:

  1. Business payroll costs, including sick leave and costs related to the continuation of group health care, life, disability, vision, or dental benefits during periods of paid sick, medical, or family leave, and group health care, life, disability, vision, or dental insurance premiums. Reminder – do not include compensation for employees earning over $100,000.
  2. Payments on any business mortgage obligation (both principal and interest; excludes prepayment of principal).
  3. Business rent payments, including rent under a lease agreement (excludes prepayment of rent).
  4. Business debt service (both principal and interest; excludes prepayment of principal or interest).
  5. Business utility payments for the distribution of electricity, gas, water, telephone, or internet access, or any other utility that is used in the ordinary course of business for which service began before March 11, 2021.
  6. Business maintenance expenses, including maintenance on walls, floors, deck surfaces, furniture, fixtures, and equipment.
  7. Construction of outdoor seating.
  8. Business supplies, including protective equipment and cleaning materials.
  9. Business food and beverage expenses, including raw materials for beer, wine, or spirits.
  10. Covered supplier costs, which is an expenditure made by the eligible entity to a supplier of goods for the supply of goods that are essential to the operations of the entity at the time at which the expenditure is made and is made pursuant to a contract, order, or purchase order in effect at any time before the receipt of RRF funds; or, with respect to perishable goods, a contract, order, or purchase order in effect before, or at any time during, the covered period.
  11. Business operating expenses, which is defined as business expenses incurred through normal business operations that are necessary and mandatory for the business (e.g., rent, equipment, supplies, inventory, accounting, training, legal, marketing, insurance, licenses, fees). Business operating expenses do not include expenses that occur outside of a company’s day-to-day activities.

2. Track Expenses and Reporting

It is important you retain and track your receipts for all expenses that were utilized by the RRF funds, since you’ll need to report on them at each year-end beginning December 31, 2021, until all the funds are utilized. To complete the reporting, log into your SBA account.

You can download a helpful expense tracking tool here.

3. Understand the Relationship Between RRF and Other Funding

If you took advantage of other COVID relief programs (Paycheck Protection Program, Employee Retention Credit, etc.), review the requirements to ensure compliance with overlapping programs, including the ability to double dip with the Employee Retention Credit. See additional information on double dipping opportunities here.

4. Learn How RRF Funds Will be Treated for Tax Filings

RRF grants are not subject to federal income tax, and ordinary federal tax deductions are preserved; however, many states do not automatically conform to the federal code. Make a point to learn how your state will treat the RRF for tax purposes.

5. Document, Document, Document

Any payments made with grant funds that are not authorized by RRF rules may require the recipient to repay the funds or become subject to federal fraud investigation. For this reason, it’s vital to document any expenses charged to the RRF and to ensure you’re complying with the rules. If you’re asked to prove any expenses, you’ll want to have the paperwork readily on hand.

Questions?

If you have any questions about handling your RRF grant, please do not hesitate to contact our Hospitality Services Group.

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This article or blog contains general information only and should not be construed as accounting, business, financial, investment, legal, tax, or other professional advice or services. Before making any decision or taking any action, you should engage a qualified professional advisor.