How the Federal Relief Bill Can Help You

Hello MLBA Members:


The COVID Relief Package has been passed through the House and the Senate. It has now been passed on to the President, who has said he will sign it. This package is further assistance for our industry that we have been working on at the Federal level.

Here is what is contained in the bill:

>Creates a $325 billion second round of the Paycheck Protection Program (PPP) – with improvements over the first rounds from last spring

• Restaurants can borrow 3.5-times their monthly payroll – as opposed to other businesses, which is 2.5-times

• Restaurants and hotels are eligible for PPP based on 300 employees per location – unlike other businesses, which is 300 employees total. There are protections for restaurant groups – no affiliation rule problems

• Qualified business expenses paid with PPP loans (both round 1 and round 2) are tax deductible – this is huge win for the restaurant industry and will save restaurants from paying taxes on forgiven PPP loans from prior and future rounds

• $2 million cap on an entity’s maximum loan - $10 million for restaurant groups.

• 60% payroll / 40% non-payroll rules still apply for permitted uses of PPP loans. Non-payroll uses expanded to include PPE supplies, physical changes to enable social distancing, and supplier costs (e.g., inventory). The expansion of loan uses is another huge win for restaurants

• PPP loan borrowers can choose between two covered periods in which to spend the loan; an eight week period or a 24 week period

>Expands funding and improves access to other Small Business Administration loan programs

>Restores deductibility of business meals for two years. This is another restaurant specific win that will help with economic recovery

>Enhances Employee Retention Tax Credit (ERTC)

>Provides additional $300/week unemployment benefits through March 14, 2021

>Provides direct payments to taxpayers making less than $75,000 per year and their dependents

Section 25: Extension of the debt relief program.

  • Resumes the payment of principal and interest (P&I) on small business loans guaranteed by the SBA under the 7(a), 504 and Microloan programs, established under the CARES Act.
  • All borrowers with qualifying loans approved by the SBA prior to the CARES Act will receive an additional three months of P&I, starting in February 2021. Going forward, those payments will be capped at $9,000 per borrower per month.
  • After the three-month period described above, borrowers considered to be underserved—namely the smallest or hardest-hit by the pandemic—will receive an additional five months of P&I payments, also capped at $9,000 per borrower per month. They include:
    • Borrowers with SBA microloans or 7(a) Community Advantage loans
    • Borrowers with any 7(a) or 504 loan in the hardest-hit sectors, as measured by the severity of sector-wide job losses since the start of the pandemic. They include food service and accommodation; arts, entertainment and recreation; education; and laundry and personal care services.
  • SBA payments of P&I on the first 6 months of newly approved loans will resume for all loans approved between February 1 and September 30, 2021, also capped at $9,000 per month.
  • If the SBA projects that appropriations provided for the debt relief program are insufficient to fund the extensions provided, the Administrator may proportionally reduce the number of months provided in each extension.
  • Clarifies eligibility and increases program integrity:
    • SBA payments should be made on any loan approved before the applicable deadline, and debt relief payments should be made only once the loan is fully disbursed.
    • SBA may establish a minimum loan maturity period for each loan product covered under this section to prevent program abuse.
    • Any business or applicant may only receive P&I payments for only one loan approved after CARES Act enactment.
  • Requires that SBA place program information on its website, conduct outreach to all borrowers, report monthly to Congress on program spending, and educate lenders, borrowers, SBA district offices, and resources partners about the program.

Please watch your emails, we will be updating you on this on a regular basis.

FYI: You will be going through your local economic group for these programs.

We know this isn’t the answer and that is why we will not stop speaking up until you are all fully open again!

-MLBA Staff