The House passed (223-203) H.R.3807, the Restaurant Revitalization Fund Replenishment Act. This bill provides $55 billion for restaurants and other small businesses harmed by the covid pandemic — $42 billion for restaurants by increasing funding for the Small Business Administration's (SBA) Restaurant Revitalization Grant Program, and $13 billion for a new SBA grant program to help hard-hit small businesses that have lost significant revenue as a result of the COVID-19 pandemic. It effectively offsets the funding for the two programs by recovering funds from other SBA COVID-relief programs.

The measure provides $42 billion for restaurants by increasing the Restaurant Revitalization Grant Program's funding — from the $28.6 billion level originally set by the American Rescue Plan to $70.6 billion.

The measure does not, however, open the program to new applicants; rather, funding would be provided only to restaurants and bars that qualified during the initial application window (as well as some who applications had been denied, under a new reconsideration process; see below). And for those who had earlier qualified but did not receive aid before the program's funding was exhausted, they could receive funding only if the restaurant is still operating or intends to reopen within six months.

Under the measure, if there is insufficient new funding to provide Restaurant Revitalization grants according to the formula established by the American Rescue Plan, the SBA must either reduce all grant awards by an equal proportion or establish a lower maximum grant amount than the current $10 million limit.

Of the bill's increased funding, it allocates $420 million for administrative expenses and $22.5 million for oversight and enforcement, including $7.5 million for the Justice Department to investigate and prosecute fraud.

For any applicant whose application had been denied during the initial application period, the SBA must provide them with a brief explanation why the application was denied. The SBA also must establish a process to allow denied applicants the ability to submit additional relevant information and request a reconsideration of their application.

Until program funds are fully disbursed and expended, the bill requires the SBA to publish regular reports on the number of applications received, processed and accepted; the number and dollar amount of grants that have been awarded and disbursed; the name and location of recipients; and the dollar amount of each recipient's award.

The measure clarifies that SBA may reject an applicant if it obtains credible information that the applicant is not an eligible business type under the program's qualifications.

Finally, SBA must institute an oversight and audit plan for grant recipients that requires recipients to document their compliance with the terms of the grant program, and for SBA to review the use of awarded funds by recipients. The plan must be submitted to Congress, and it must require routine reports every 30 days until all program funds have been fully expended.

The bill establishes a new Hard Hit Industries Award Program to provide financial aid to small businesses that have experienced at least a 40% decrease in revenue as a result of the COVID-19 pandemic, appropriating $13 billion for FY 2022 for the program (of which $380 million is allocated for administration and oversight).

 To qualify, a small business must have 200 or fewer employees, not be government owned or be a publicly traded company or owned by a private equity firm. Applicants must certify that the uncertainty of current economic conditions makes the award necessary to support ongoing operations, and that they have not received an SBA Shuttered Venue Operator Grant or a Restaurant Revitalization Fund grant. The SBA must use tax records to verify submitted information.

Under the measure, pandemic-related revenue loss is based on the difference between the applicant's 2019 gross receipts and the average of their annual gross receipts for 2020 and 2021 (it establishes modified formulas for businesses that were not in operating for all of 2019 or had opened in the first two months of 2020).

The award amount would be equal to the calculated pandemic-related loss in revenue, with a maximum award of $1 million. If there is insufficient funding for the program, all awards would be reduced by an equal proportion. Funds may be used to cover payroll costs, certain payments to contractors, mortgage and rent payments, utility and maintenance expenses, covered worker protections, supplies and supplier costs, basic operational expenses, paid sick leave, other expenses necessary to maintain social distancing requirements, and any other expenses that were within the scope of normal business practices.

For tax purposes, grant awards made under the program would not count toward a recipients gross annual income.

Initial priority in providing aid must be given to applicants that have experienced an 80% loss in revenue, with secondary priority given to businesses that have experienced a 60% loss in revenue. Within all categories, applicants with 50 or fewer employees would receive the highest priority.

 All recipients must use their funds by March 23, 2023, though the SBA may extend the covered period to a date that is not more than two years after the date of enactment. Recipients must return any unused funds at the end of the covered period.

The bill requires the SBA to maintain regular communication with applicants, including through regular information sessions. The administration must also publish weekly data on the number of applications received and the number accepted, the amount of payments awarded and disbursed, and the name and location of grant recipients.

The SBA must also provide an explanation to any application whose application was denied and establish a reconsideration process that would allow applicants to submit additional information that might affect the SBA's decision.

The measure directs the Treasury Department to share information with the SBA to help SBA confirm an applicant's identity and eligibility.

In coordination with the Office of Management and Budget (OMB), the SBA must institute an oversight and audit plan for grant recipients that requires recipients to document their compliance with the terms of the grant program, and with SBA to review the use of awarded funds by recipients. The plan must be submitted to Congress, and it must require routine reports every 30 days until all program funds have been fully expended.

Finally, the SBA must issue rules to administer the program. The OMB may waive certain federal requirements for grant applicants if it determines that doing so would expedite awards and help prevent eligible small businesses from failing or suffering undue hardship.

 To effectively offset the bill's funding for both Restaurant Revitalization Grants and the Hard Hit Industries Award program, the measure provides for the recapture of funds provided for pandemic relief to other SBA-administered programs (including funds rescinded, seized, reclaimed, or otherwise returned from the Paycheck Protection Program, the COVID-19 Economic Injury Disaster Loan and emergency grant program, and the Shuttered Venue Operators grant program).

 (As of press time, the Congressional Budget Office had not released a cost estimate for the bill, so it is unclear if this would partially or fully offset the measure's $55 billion in funding).

Finally, the bill extends to March 11, 2023, the time period for eligible expenses to be covered under the Shuttered Venue Grant program, and extends to April 15, 2023, the deadline for grant recipients to use those funds for such expenses.

The measure does not, however, provide any additional funding for that grant program.

Should Congress pass H.R.3808, the Relief for Restaurants & Other Hard Hit Small Businesses Act?