​What Loan and Relief Options are Available to Restaurant Owners?

• Paycheck Protection Program (PPP): The CARES Act contains a key provision that provides $349 billion for small businesses through federally backed loans under a modified and expanded Small Business Administration (SBA)7(a) loan guarantee program called the Paycheck Protection Program.  The goal of the PPP is to help restaurants retain and/or rehire employees by providing an eight-week loan, equal to 2.5x an average monthly payroll, with the loan amount capped at $10 million. If the employer can retain their full-time equivalent (FTE) employees without significantly reducing salaries, the borrowing employer is eligible for 100% loan forgiveness. More details below under the “Paycheck Protection Program” section.  

 

• Economic Injury Disaster Loan (EIDL): The SBA’s EIDL program is available for certain businesses located in an area affected by a disaster – such as public health disaster – that have suffered substantial economic injury as a result of such disaster.  The CARES Act includes $10 billion to expand the SBA EIDL program to additional eligible businesses impacted by the COVID19 pandemic.  The maximum amount available to eligible small businesses is $2 million, but the actual loan amount is limited to the economic injury as determined by the SBA.  The applicant can also request an advance of not more than $10,000 within three days of when the SBA receives the applicant’s application. More details below under the “Economic Injury Disaster Loan” section.  

 

• Employee Retention Tax Credit (ERTC): The tax credit provides all businesses with a refundable payroll tax credit for 50% of wages paid by employers to employees during the COVID-19 pandemic. Employers with 100 or fewer employees may claim the credit for all employee wages, regardless of whether the employer is fully operating or partially or fully shut down.  Companies with more than 100 employees may claim the credit for employees who are on the payroll but not currently working due to the crisis. The credit is provided for the first $10,000 of compensation, including health benefits, paid to an employee for wages paid from 3/13/2020 12/31/2020.  o Employers who participate in the PPP are not eligible for ERTC.