The latest COVID19 bill signed in December created a second round of PPP funding with $284.5 billion available. There are hidden gems in this bill that restaurant owners may not be aware of. For example, the cost to install or create a drive-thru window is available for coverage by PPP funds as well as practically any physical improvements within the store (sneeze guards or physical barriers between booths or expansion of outdoor seating).

This industry has been hit especially hard and a lot of capital went into improvements over the past few months as restaurant owners fought for survival.  Now they can recover some of that in the latest funding bill. Here are the ten things restaurant owners must know about the latest bill from the restaurant brokers at We Sell Restaurants.

First - Funding opens Monday, January 11 for new borrowers with community financial institutions only. They can make First Draw Loans on Monday, January 11 and Second Draw PPP Loans on Wednesday, January 13.  PPP will open for all lenders after that.

Second - Restaurant Owners ARE eligible for a second round of funding if you meet several criteria related to change in revenue, and maximum number of employees per location.

Third – You must employ less than 300 people per physical locations, a way to keep large companies from getting massive loans at the expense of small operators.

Fourth – If your business did well, you may not qualify. Restaurant owners must show a loss of 25% of more in revenue for a calendar quarter compared to the same time period last year. That means a 25% or more decrease from gross receipts during the same quarter of 2019.

There are multiple variations on this. If you were not in business during the first or second quarter of 2019 but were in business during third and fourth quarter of 2019 you calculate using receipts for 1^st, second, third or fourth quarter of 2020. If you were down 25% or more over third or fourth quarter of 2019, it qualifies.

Fifth - Restaurant Owners do not have to demonstrate forgiveness on prior PPP funds before applying for or receiving a second PPP loan.

Sixth – There is a new streamlined process for forgiveness for loans of up to $150,000. It consists of a single one-page certification with a description of the number of employees the eligible recipient was able to retain, and the estimated amount of the covered loan spent by the eligible recipient on payroll costs. Restaurant owners will need to affirm that you provided accurate information and retain records for several years.

Seventh – The forgivable expenses for payroll include salaries and wages, payment for vacation, parental, family, medical or sick leave, group heath benefits and retirement benefits.   It also includes the payment of state and local taxes assessed on any compensation paid.

Eighth – The Eligible or forgivable expenses for non-payroll includes: rent payments, mortgage interest payments, utility payments, operations costs (accounting, payment process, business software and more), property damage related to looting, and supplier costs for goods essential to the business’ operation. Check with your CPA on this one as we are not sure whether to interpret that to include  perishable inventory.

In addition, they added any operating or capital expenses to adapt business activities in response to the virus. This is where you have your drive-thru window covered along with ANY expenses for personal protective equipment, filtration or ventilation systems, physical barriers, expansion of indoor, outdoor, or combined space to account for social distancing measures. This is HUGE for restaurant owners that expanded patio space or installed a drive through as this capital can be recovered now.

Ninth - There are “set-aside” funds for new and smaller borrowers with fewer than ten employees or loans of less than $250,000. Restaurant owners operating in low or moderate-income neighborhoods will also be part of the set aside that totals $40 billion of the total program.

Tenth – If you were not in business before February 15, 2020, you are not eligible for relief. If you were temporarily “closed” or not in business for a period of time due to COVID-19, you still qualify for a second draw PPP.

This is critical funding at a time when restaurant owners need it to weather the winter. The restaurant brokers recommend you apply quickly. As always, we are available to assist you with a resource for this relief and any other measures to assist the industry.

The SBA has the authority to issue loans under the PPP second draw through March 31, 2020 but the restaurant brokers advise you to file as early as possible as the funds may not remain available through that date.