Updated April 16, 2020 3:30 pm PDT
The President signed the heftiest economic rescue bill in modern history on March 27, providing $2.2 trillion to help Americans, hospitals and businesses withstand the consequences of the coronavirus. The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) passed in a bipartisan 96-0 Senate vote, while the House passed the bill with a quorum of more than 216 members present.
This blog post had previously summarized the major provisions affecting the restaurant industry: 1) the Paycheck Protection Loan Program, 2) Economic Injury Disaster Loan (EIDL) and loan advance, and 3) Tax relief and other benefits. Due to the lapse in appropriations, that information, including eligibility requirements and how to apply, has been removed. Check back for updates.
The Treasury Department and the Small Business Administration wait for Congress to approve new funding for these programs.
Paycheck Protection Program Loan
As of April 16, 2020, the SBA stopped accepting applications for the CARES Act’s Paycheck Protection Program. The message on the SBA website reads: The SBA is currently unable to accept new applications for the Paycheck Protection Program based on available appropriations funding.
The U.S. Treasury and Small Business Administration are seeking additional funding for the program. This blog post will be updated if new funding is approved by Congress.
For more information on the Paycheck Protection Program, visit https://www.sba.gov/funding-programs/loans/paycheck-protection-program.
Economic Injury Disaster Loan
The Small Business Administration has removed information about the CARES Act’s Economic Injury Disaster Loan from its website. See a breakdown of loans approved by state in the first round of the EIDL program as of April 24, 2020.
For more information on loan resources as part of the CARES Act, visit https://www.sba.gov/page/coronavirus-covid-19-small-business-guidance-loan-resources.
EIDL Loan Advance
SBA is unable to accept new applications at this time for the Economic Injury Disaster Loan COVID-19 related assistance program (including EIDL Advances) based on available appropriations funding.
Applications already submitted will continue to be processed.
For more information on the EIDL loan advance, visit https://www.sba.gov/funding-programs/loans/coronavirus-relief-options/economic-injury-disaster-loan-emergency-advance
SBA Express Bridge Loan
If a small business has an urgent need for cash while waiting for a decision and disbursement on an Economic Injury Disaster Loan, they may qualify for an SBA Express Disaster Bridge Loan. However, the SBA has removed the online application for the Economic Injury Disaster Loan from its website.
For more information on the SBA Express Bridge Loan, visit https://www.sba.gov/funding-programs/loans/coronavirus-relief-options/sba-express-bridge-loans
Additional economic relief provided to restaurant operators through the CARES Act
Deferred Payroll Taxes and Tax Credit
Restaurants that continue to pay employees during the COVID-19 outbreak will receive a refund in the form of a tax credit of payroll taxes paid on 50% of the wages.
The first half of the 6.2% Social Security payroll tax will be due on December 31, 2021, and the remaining half will be due on December 31, 2022.
Eligibility: Restaurant business that have been forced to close or have suffered a 50% drop in revenues from a year ago. Businesses with 100 or more employees get the break on wages paid while they were closed. Small restaurant operators get the credit on all wages paid.
Concessions for tipped employees
The bill enables full-service establishments to base their payroll and forgiveness calculations on wages servers are currently being paid, rather than the wages plus gratuities they collected waiting tables prior to the COVID-19 pandemic. This provision was added since table service is currently prohibited in most states, preventing servers from earning tips.
Increase in unemployment payments
The package helps replace the salaries of furloughed workers for four months. Furloughed workers will get whatever amount a state usually provides for unemployment, plus a $600-per-week add-on.
Yet to be determined
Keep an eye out for issues still to be determined, including how this new law interacts with existing laws such as the Family and Medical Leave Act; whether or not employers that furloughed their employees before April 1, 2020 will be eligible for some of these benefits; what documentation will be required from employers in order to receive some of the benefits, and how medical privacy law (HIPPA) will affect the new bill.