Congress passed a $900 billion relief bill to provide short-term economic relief to the country in the face of the coronavirus pandemic. The plan includes several items that will benefit restaurants, most importantly a second round of access to the Paycheck Protection Program (PPP), with unique provisions aimed to assist the restaurant industry, which continues to endure unparalleled job and revenue losses.
The plan passed targets restaurant relief with provisions including:
- Enhanced PPP Loan Size: The PPP provides a business with a forgivable loan based on 2.5 times its monthly payroll costs. Restaurants, however, can seek forgivable loans based on 3.5 times monthly payroll costs.
- Enhanced Access to PPP: Companies that employ a total of 300 or more employees at all locations (combined) are deemed ineligible for the PPP. The bipartisan plan reflects the reality that many mid-sized and larger restaurant groups are on the verge of bankruptcy and allows restaurants to qualify for PPP as long as they do not employ more than 300 employees at each physical location.
- Other provisions in the bill that will benefit restaurants include the deductibility of business expenses paid with PPP loans, enhancement of the Employee Retention Tax Credit (ERTC), extension of the augmented Work Opportunity Tax Credit (WOTC), and increased tax deduction for business meals.
Learn more about aid for restaurants here.
This fresh round of PPP is a necessary shot in the arm for the restaurant industry. Without question, it will keep some restaurants from closing in the next couple of months, and give them resources to scratch through a very bleak winter. With so many Colorado counties facing indoor dining closures, it was imperative that the industry receive substantial cash help before the end of 2020, and this gives them a bridge to survive to early next year. We especially appreciate the targeted restaurant relief in this package such as the larger forgivable loan size, an exception for restaurants on the number of employees per location vs. combining locations, and an increased tax deduction for business meals. We applaud the National Restaurant Association for working around the clock to make this happen, and we are grateful for our network of State Restaurant Association counterparts around the country for pushing in uniform to make this reality. This is not the silver bullet to save the industry. We will need to see more substantial relief from Washington as the Biden Administration takes power, and this industry, which historically employs 10% of Colorado’s workforce, needs to continue to receive support as the vaccine allows us to begin recovering. Otherwise we will see complete decimation of restaurants and the people they employ – and our communities will no longer look like our communities.