The COVID-19 pandemic has been catastrophic for many restaurants, hotels and other hospitality businesses. Small businesses are especially vulnerable to sudden loss of revenue and forced closures. Although the situation seems bleak, legislation is being enacted to help both businesses and workers hurt by coronavirus. The new $2 trillion Phase III coronavirus relief package could provide even more relief.
Phase III of COVID-19 Legislation and Economic Relief
According to Investopedia, H.R. 758, or the CARES Act, is Phase III of COVID-19 legislation. It is also the largest stimulus bill ever in the United States. The $2 trillion bill includes expanded unemployment benefits, direct payments to individuals, relief for small businesses and more. The bill was passed by the Senate on March 25 and passed by the House of Representatives on March 27. It is expected to be signed by President Trump shortly.
In a March 26 interview with Sean Hannity on Fox News, Treasury Secretary Steve Mnuchin discussed the relief package. Mnuchin said he hoped to get the small business program up and running the following week, allowing small businesses to get a loan immediately, and the loan could be forgiven if the businesses keep their employees. This will help small businesses continue to employ their workers while struggling with circumstances beyond their control.
CNBC reports that eligible businesses may be able to borrow up to the lesser amount of $10 million or 2.5 times their payroll. Businesses may also be eligible for a $10,000 emergency grant. Businesses with fewer than 500 employees may be eligible, and the loans are provided through private financial institutions. Loan forgiveness is also available.
The National Law Review explains that businesses in certain industries may also be eligible if they have multiple physical locations with 500 or fewer employees per location. Borrowers may be eligible for loan forgiveness for amounts spent on payroll during the eight-week period following the loan, as well as certain other operating costs. The amount of the loan that is forgiven may be reduced based on reduced retention and/or compensation compared to the previous year. However, borrowers who rehire laid off workers will not be penalized for having a reduced payroll at the beginning of the period.
Securing Relief for Your Business
The CARES Act should provide much needed relief for restaurants and other businesses that have been impacted by COVID-19.
Some important information to consider:
- For restaurants and hotels, even if your business has more than 500 employees, as long as you have 500 or fewer employees per location, it’s possible that you may still qualify.
- Even if you have already laid off workers or reduced wages, you may still qualify.
The CARES Act is a massive piece of legislation, and it includes many important details regarding eligibility for small business loans and loan forgiveness. There is a lot to consider, but help is available.
The Small Business Administration has a Coronavirus (COVID-19): Small Business Guidance and Loan Resources that may provide useful information.
Contact your bank for help applying for an SBA loan. If your bank doesn’t currently provide these loans, we can refer you to banks that do. Please contact Amy Vitarelli at AmyV@heffins.com if you need assistance.