RELIEF FOR THE RESTAURANT INDUSTRY IS (FINALLY) ON THE WAY!
We have not read the 5,000 page $248 Billion new Covid-19 relief bill, but it apparently includes a number of provisions:
- Expansion of the allowable PPP Loan to cover not just Payroll and Rent but some portion of Cost of Good Sold. This will apply to the first PPP loan earlier in the year, so more money can be obtained from application of that allowance. The amount and qualification for the allowance of CGS expense in the new bill is not yet clear.
- This is big ! The loans, old and new, will be considered non-taxable when it is forgiven, though the expenses it covered will be tax deductible.
- Reinstatement of the full corporate tax deduction (had been 50%) for business meals, including delivery and takeout, until 2023. The Joint Committee on Taxation estimates This implies a $21-$27 billion boost in restaurant revenues in 2021 and 2022, saving taxpayers $2.2-$2.8B in tax.
The above items already seem clear. Since the 5,000 page bill was passed just last night, it is not yet apparent who will qualify for the new $248 billion and what expenses will be covered.
Our readers will be interested to know that the Lenders, backed by the US Government, have an adequate incentive to help, as you might have suspected. Lenders, from banks to “fintechs” such as PayPal, Square or Intuit will earn $2,500 on loans up to $50K, 5% of loans between $50K and $350K, 3% of loans between $350k and $2M and 1% above $2M. Your friendly lender is happy to help, therefore, if you need help. They want you to qualify to the greatest degree possible. The US government, of courrse, pays these fees, but another 2 or 3 billion is small in today’s scheme of things.
All of the above is good. We fully expect that the new administration will do even more. 14 million people are employed in the restaurant industry, too many votes to ignore.