The U.S. Department of Treasury Announces Paycheck Protection Program for Small Businesses, Including Restaurants, Seeking Assistance from COVID-19

Today, the U.S. Department of Treasury and Small Business Administration (SBA) announced the initiation of the Paycheck Protection Program for employees of small businesses who have been impacted by the current COVID-19 crisis. The program authorized up to $349 billion in forgivable loans toward job retention and other expenses for small businesses.

What Does This Mean for the Restaurant Industry?

According to the program guidelines, small businesses, including restaurants and food industry businesses with 500 or fewer employees are eligible. Businesses with more than 500 employees are eligible in certain industries.

For this program, the SBA’s affiliation standards are waived for small businesses in the hotel and food services industries.

The loan amounts will be forgiven as long as:

1. The loan proceeds are used to cover payroll costs, and most mortgage interest, rent, and utility costs over the eight-week period after the loan is made

2. Employee and compensation levels are maintained.

The proceeds from these loans should be used for:

1. Payroll costs, including benefits

2. Interest on mortgage obligations, incurred before February 15, 2020

3. Rent, under lease agreements in force before February 15, 2020

4. Utilities, for which service began before February 15, 2020

Payroll costs include:

• Salary, wages, commissions, or tips (capped at $100,000 on an annualized basis for each employee)

• Employee benefits including costs for vacation, parental, family, medical, or sick leave; allowance for separation or dismissal; payments required for the provisions of group health care benefits including insurance premiums; and payment of any retirement benefit

• State and local taxes assessed on compensation

How Much are the Loans?

Loans can be granted for up to two months of your restaurant's average monthly payroll costs from the last year plus an additional 25% of that amount. That amount is subject to a $10 million cap.

Starting April 3, 2020, small businesses and sole proprietorships can apply for and receive loans to cover their payroll and other certain expenses through existing SBA lenders.

Other regulated lenders will be available to make these loans as soon as they are approved and enrolled in the program.

Where can I apply?
You can apply through any existing SBA lender or through any federally-insured depository institution, federally insured credit union, and Farm Credit System institution that is participating. Other regulated lenders will be available to make these loans once they are approved and enrolled in the program. You should consult with your local lender as to whether it is participating. Visit www.sba.gov for a list of SBA lenders.