COVID-19 UPDATE: Details on the Federal Relief Package, Passed March 25 March 26,2020

Update, March 27: President Trump signed the CARES Act, or federal relief package into law, on March 27. There are still many unanswered questions on how exactly the details behind this will work, including eligibility, exclusions, and more. Our understanding is that the details on how this will be administered and the specific rules will be worked out over the coming weeks – hopefully we’ll know more by mid-April. Keep in mind that this was a fast-moving piece of legislation that was put together in 10 days, and is an 850+ page document. Typically legislation moves much slower at the Federal level so there is time to work out more details prior to it being passed. In the meantime, we encourage you to call your trusted banker or lending organization if you're planning to take advantage of loans outlined by the CARES Act.

Recording of National Restaurant Association webinar on the CARES Act: click here.

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On March 25, congressional leaders released the final text of their $2 trillion coronavirus rescue package. The agreement includes a dramatic expansion of unemployment insurance, a rescue fund for state and local governments, immediate cash for hospitals, and a huge pool of grants and loans for small businesses. See the National Restaurant Association's full analysis here.
 
Passage in both chambers is all but assured – the only question is one of timing. The Senate passed the bill on March 25. Timing of a House bill remains murky. A vote March 26 or March 27 is likely. President Trump is likely to sign the bill very soon thereafter.
 
Overall the bill is very strong, with many provisions that specifically reflect the National Restaurant Association’s asks from last week. Here are the highlights of the deal:
 
SBA Loans
The measure creates a $349 billion program for the SBA to offer unique loans to small businesses (500 or fewer employees). The loan amount is based on 250% of the borrower’s average monthly payroll cost for the preceding year (provisions for seasonal employers are included), up to $10 million. Collateral requirements are waived, and the “credit elsewhere” requirements (which have slowed down the process) have been waived as well. The loan is forgiven if used for payroll costs, mortgage interest, or rent/utilities. 

• An exception was made to the small business requirement for restaurants, food service, caterers, and hotels. The 500-employee number is based on the number of employees at each physical location. So these types of businesses with 600 employees over multiple properties would qualify for these loans. This ensures that a number of larger independent restaurants and franchise owners can participate.
• Only small businesses that employ less than 500 employees are eligible for Paycheck Protection Program and SBA Loan Forgiveness. However, restaurant, foodservice, caterers, and hotels that employ not more than 500 employees per physical location of the business are also eligible to receive a single loan.