Independently owned restaurants are blasting the passage of a bipartisan bill that would replenish funds to a program designed to keep small businesses from shuttering amid the nation’s coronavirus pandemic, arguing it does not make the “fixes” their industry desperately needs.
The $484 billion relief bill, which passed the Senate on Tuesday, would inject $320 billion into the Paycheck Protection Program, which was halted last week after it ran out of money. That includes $60 billion for community-based lenders, smaller banks and credit unions to assist smaller businesses that don’t have established relationships with big banks and had a harder time accessing the funds in the first round of loans.
But the Independent Restaurant Coalition – which represents chefs and owners of small, non-chain restaurants – has lobbied for policy changes to restrictions around how the loans are used and the timeline in which the money must be spent. They say the rules don’t work for businesses that still aren’t sure when customers will return.
The bill would not make any of these changes, however.
“Today we learned Congress does not care if local restaurants close forever,” the Independent Restaurant Coalition said in a statement after the Senate approved the package by voice vote. “The Senate passed new funding for the Paycheck Protection Program but until that program is fixed, it still won’t help America’s 500,000 independent restaurants reopen or ensure their 11 million employees have a job when this ends.”
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The bill, which has support from House Speaker Nancy Pelosi, heads to the House for a vote Thursday. It would then head to the desk of President Donald Trump, who’s signaled he’s ready to sign the agreement.
Most restaurants have closed amid stay-at-home orders imposed by states across the country or shifted to take-out food only. Restaurants were some of the first business to be ordered to shut down temporarily. Restaurateurs say the PPP changes are needed for many to reopen.
The PPP, which was created with approval of the original CARES Act last month, allows businesses smaller than 500 employees, including restaurants, to apply for financial loans during the pandemic to help keep them from closing completely.
To have the loans completely forgiven, businesses are required to spend 75% of the federal money on payroll and 25% on fixed expenses such as rent, utilities and other bills. A business must start spending the money 10 days after getting approved, and they have eight weeks until the loan expires.
More: Senate approves measure to replenish halted coronavirus small-business loan program
But restaurants say these are unreasonable mandates while many are closed and not accumulating normal business expenses – and could remain closed for months, well past the expiration date.
Restaurateurs want the loan extended from eight weeks to three months after they open, noting business will probably be slow even when they open their doors again, as people remain reluctant to re-congregate until there’s a COVID-19 vaccine. They want the origination date of the loan to be when they can legally reopen fully, not within 10 days of receipt. They’ve asked that the period to replay loans be lengthened from two years to 10 years.
“Restaurants are cash flow businesses, and until they can generate revenue they’ll still have a hard time maintaining a payroll whenever they reopen,” the group said. “Changes to the Paycheck Protection Program, like moving the origination date of the loan to when restaurants can legally operate, are necessary to ensure restaurants can afford to reopen and rehire our workers.
“The last stimulus bill included a special $25 billion carve-out to keep 750,000 airline employees working. Why not make a few changes to help independent restaurants, who employ 15 times more people?”
Other requests from independent restaurants include a stabilization fund, totaling $100 billion, that would offer grants to restaurants to rehire employees and pay rent. They’re also seeking changes in business interruption insurance policy so that it covers COVID-19.
Despite the setback, the Independent Restaurant Coalition vowed to press on in a letter to members, pointing to positive meetings with both Senate and House leadership and the next round of congressional action as reasons for encouragement.
Congress is expected to take up perhaps another $1 trillion in the coming weeks as part of the government’s response to the COVID-19 outbreak, giving restaurants another opportunity to get the changes they seek.
“We remain hopeful that the PPP will be adjusted to reflect the changes we’ve advocated for – either through additional guidance on this bill or in the next round of legislation,” the coalition said in the letter. “Advocacy for the next phase of legislation will begin immediately.”
A survey from the James Beard Association found independent restaurants laid off 91% of their hourly employees and nearly 70% of salaried employees as of April 13 – double-digit increases in both categories since March. The poll of 1,400 small and independent restaurants found 38% of have closed temporarily or permanently, and 77% have seen their sales drop in half or worse.
Twenty-eight percent of restaurants said they don’t believe they can survive another month of closure, and only one out of five are certain they can sustain their businesses until normal operations can resume.
Follow Joey Garrison on Twitter @joeygarrison.
Source: Thanks https://eu.usatoday.com/story/news/politics/2020/04/21/coronavirus-restaurants-miss-out-fixes-sought-new-relief-bill/3001414001/