What the New $900 Billion Federal Relief Package Means for Restaurants
Updated: Jan 4
When Congress passed the second largest relief package in history, the bill contained various elements specific to restaurants and the hospitality industry. The bill would not have been possible without your advocacy.
While the final measure does not include the RESTAURANTS Act, this package does provide important necessary relief for the hospitality industry. We will continue to advocate in the next Congress for more relief. Also, this federal package does not eliminate the need for continued relief at the state and local level and we will continue to advocate for the Legislature and Governor to take quick action to provide the additional $100 million in grants, and other aspects of our legislative agenda.
The National Restaurant Association developed this detailed summary, with a helpful table that outlines the major changes restaurants will see, how to use this second round of PPP and other restaurant related components of the bill.
Highlights from the bill include:
Enhanced Paycheck Protection Program (PPP) Loan Size: The approximately $300 billion second-round of PPP provides restaurants with a forgivable loan based on 3.5 times its monthly payroll costs. This is an increase from the first round and other non-hospitality businesses remain at 2.5 times monthly payroll costs in this latest bill. This is a win for restaurants.
Enhanced Access to PPP: Restaurants can qualify for PPP as long as they do not employ more than 300 employees at each physical location. This is another hospitality specific aspect of the program. Other companies that employ a total of 300 or more employees at all locations (combined) are deemed ineligible for the PPP.
Other provisions in the bill that will benefit restaurants and employees 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), a2 year 100% tax deduction for business meals, additional $300/week in unemployment benefits through March.
Additional elements include:
As mentioned above, qualified business expenses paid with PPP loans (both Round 1 and Round 2) are tax deductible. This was a long and hard-fought battle with the Treasury Department to get this language included and is a big win for our industry.
$2 million cap on an entity’s maximum loan with up to $10 million for restaurant groups.
PPP Flexibility Act provisions apply. Borrower can choose 8 week or 24 week period
60% payroll / 40% non-payroll rules still apply for permitted uses of loans. Non-payroll uses are expanded to include PPE supplies, physical changes to enable social distancing, and supplier costs (e.g., inventory).
Additional supports for businesses with 10 or fewer employees.
Temporary enhancements to SBA (non-PPP) Lending Programs.
$300/week increased unemployment benefits through March.
Direct payments to taxpayers making less than $75,000/year and their dependents.
We expect the funds for the PPP to be available in January. There will also need to be additional guidance provided by Treasury and the Small Business Administration.
We will continue to provide additional updated information as we receive it and share resources on the Seattle Restaurant Alliance website and Resource page and the searchable Washington Hospitality Association Coronavirus Resource Guide here.
Your Seattle Restaurant Alliance Government Affairs Team