Restaurants to Congress: Programs Not Providing Needed Relief

 The National Restaurant Association told Congressional leaders that COVID-19 relief funds were envisioned as a vital tool to help restaurants bridge the crisis, but there are increasing warning signs that more relief will be needed to help restaurants and employees.

The association pointed out that the COVID-19 crisis has already cost 3 million restaurant employees their jobs and cut $25 billion in revenue from the industry since March 1, and that 15 percent of restaurants have or will within two weeks, permanently close with total job losses projected at 7 million before the crisis abates.

“While COVID-19 funds are helping many businesses and employees across the country, there is no escaping that a growing number of restaurant owners feel that the Paycheck Protection Program (PPP) is not going to prevent them from permanently closing their operations in local communities,” Executive Vice President Sean Kennedy said. “The premise of the Paycheck Protection Program is to be a vital way of allowing restaurants to bridge this crisis, but there are warning signs that it is not providing the relief that is so desperately needed for our industry.”  

The association praised Congressional leaders who have pledged to provide PPP funds beyond the $349 billion authorized by Congress, and called for expanding the program to the maximum possible level. It noted that operational and staffing issues unique to the industry have hindered restaurants’ access to PPP funding.

To address these challenges, the association called on Congressional leaders to address the following changes:

• Easing restrictions to reflect industry realities such as staffing levels far below the threshold required by PPP because restaurants are closed, or at skeleton staff levels.
• Timing flexibility to extend the covered period from 60 to 90 days because there is growing concern restaurants will not be fully operational in time to meet the requirement.
• Match loan terms implemented at two years to the 10 year maturity date in the language written by Congress to help deal with long-term instability ahead.
• Congress should re-emphasize that the Small Business Administrator and Secretary of the Treasury can act on their explicit “de minimis” exemption authority to protect businesses that face reductions in loan forgiveness especially if a business has a major decrease in sales.
• Barriers like the personal guarantee and collateral requirements for Economic Injury Disaster Loans (EIDL) should be removed so that employers and employees can utilize liquidity immediately, and restaurants should be able to access a second EIDL because of the prolonged impact on the industry.
• The Employee Retention Tax Credit must be amplified to ensure more businesses can retain employees during government-ordered shutdowns and distancing protocols, along with other key changes.
• 501(c)(6) nonprofit organizations should be able to participate in PPP so State Restaurant Association and Destination Marketing Organizations can continue to provide critical service and promotional programs to support local economies.
• Businesses utilizing PPP and seeking loan forgiveness must be allowed to defer payroll taxes owed this year to the next two years as provided under the CARES Act.