Restaurant Recovery Update December 21, 2020

December 21, 2020
Massachusetts Restaurant Association

Congress getting closer to passing $900 billion dollar stimulus package

Tonight, Congress is expected pass a $900 billion relief bill to provide short-term economic relief. The plan includes several items that will benefit restaurants, most importantly a second round of access to the Paycheck Protection Program (PPP), with unique provisions aimed to assist the restaurant industry, which continues to endure unparalleled job and revenue losses.
The legislative language is still being reviewed, but it is expected to include the following provisions:
  • Creation of a $325B second round of PPP
  1. Restaurants can borrow 3.5x their monthly payroll – as opposed to other businesses, which is 2.5x.
  2. Restaurants and hotels eligible for PPP based on 300 employees per location – based on other businesses, which is 300 employees total. Similar 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 a big win, as the IRS interpretation has caused unexpected problems for recipients of PPP.
  • PPP Flexibility Act provisions apply:
  1. 60% payroll / 40% non-payroll rules still apply for permitted uses of loans. 
  2. Non-payroll uses expanded to include PPE supplies, physical changes to enable social distancing, and supplier costs such as inventory and product
  • Restores deductibility of business meals for a two year period
  • Employee Retention Tax Credit enhanced.
  • Work Opportunity Tax Credit (WOTC) is likely to be extended this year in a different bill.
  • $300/wk unemployment benefits
  • Direct payments to taxpayers making less than $75k/yr, and their dependents. 
This is a very significant bill for the restaurant industry in Massachusetts. We know that more relief will be needed in the coming months, but today's action is a significant down payment to help get us through to the other side.
We will have more information, including timelines of availability, in the coming days