At long last, negotiations are taking place on a new COVID relief bill. The $908 billion dollar bill includes some important wins for restaurant owners. According to a framework circulated yesterday available at this link, there are several victories, but the most important ones are outlined by the Restaurant Brokers at We Sell Restaurants in this article.
First and foremost, the framework includes $300 billion for the SBA or Small Business Administration. This would be divided between the various programs that have been helpful for restaurant owners to provide additional immediate funding or assist with tax issues surrounding aid they have already received.
Here is a highlight of the most important items should this bill become a reality.
More PPP Money for Restaurant Owners
A second round of PPP (Paycheck Protection Program) loans will be part of the package. That means the hardest-hit small business (most restaurants) would qualify for a SECOND forgivable PPP loan.
In order to make sure the funds are going to those most affected; the terms would limit a second round of funding to small businesses with 300 or few employees that have sustained a 30 percent revenue loss in any quarter of 2020. Most of our restaurant owners would qualify under this criteria for a second round of relief.
Tax Deductibility
This was a major issue with the prior bill which treated PPP money as income creating a tax liability for restaurant owners. Under the “fix”, business expenses paid for with the proceeds of PPP loans are tax deductible which was the original intention of Congress under the CARES Act.
Simplified Processing of Loan Forgiveness
The loan forgiveness process is set to be streamlined and simplified, a relief for restaurant owners struggling with the paperwork submissions under the current program. This would apply to PPP funding of $150,000 or less.
Extension of the 6 Months Payment of SBA Loans
The current outline calls for sections of Section 1112 of the CARES Act which allowed new borrowers to have their first six months of payments including principal, interest and associated fees on SBA 7(a) loans, 504 and microloans paid by the government. This is a huge win for those buying a restaurant or selling a restaurant.
Additional funds for EIDLP
The Economic Injury Disaster Loan grant advances is also funded again under the newest negotiations, a win for those who did not receive the EIDLP loans in the first round since these are low interest loans with low payback requirements. That will create needed cushions to develop cash flow while the vaccine works its way through the population, critical for restaurant owners.
Unemployment Assistance
In addition to these items, there would be an extension of all pandemic unemployment insurance programs by 16 weeks from their current expiration at the end of December and supplement Federal benefits would expand by $300 per week for 16 weeks, from the end of December into April 2021.
Live Venue Relief
While it has been rarely discussed, live venues all have a food component and for the most part, have been shuttered for months. Many of the food vendors are restaurant owners from the surrounding area who do this service as an add-on or part of their catering business. Live venues will get funds under this proposed bill so that when they return to hosting events, restaurant owners will have this outlet to generate additional business.
Overall, restaurant owners and most Americans have been waiting for Congress to act on additional relief for several months. It finally appears to be coming closer to reality. We will keep you updated on the passage of this or any other relief for restaurant owners.