What the $2 Trillion Stimulus Bill Means for Your Restaurant
Donald Trump signed the bipartisan $2 Trillion government stimulus package (also known as the CARES Act) into place on March 27 as the nation braced for the health and economic consequences of COVID-19. With many states pronouncing stay-at-home orders and the closure of non-essential businesses, enterprises are facing challenges never endured before. Both consumers and business owners have been unpacking the 880-page bill, searching for answers to their most pressing questions. We’ve done some digging to help you understand the implications for the $2 trillion stimulus bill and your restaurant, as well as your customers.
Stimulus Bill Overview: What it Includes
Much like any economic recession, the hardships we all face cause distress to both corporate and personal finances. To combat this, the United States government, with the help of the Treasury Department, has enacted a bill injecting $2 trillion of fiscal stimulus to aid those hampered by the coronavirus. From government checks to deferred payroll taxes, here’s what you can expect.
What Can Restaurants Expect?
$377 billion have been dedicated to small businesses and banks. The injection intends to provide them the liquidity they need to stay afloat throughout this time.
The Paycheck Protection Program enables small businesses with 500 employees or less to qualify for a loan of up to $10 million to cover wagers and operating expenses. The loan will incur a maximum interest rate of 1% to expedite the origination process, or how long it takes for the loan to be processed. According to the Small Business Association, “If all employees are kept on the payroll for eight weeks, SBA will forgive the portion of the loans used for payroll, rent, mortgage interest, or utilities. Up to 100 percent of the loan is forgivable.”
By maintaining your workforce, you would be responsible for only the interest accrued— much less than the loan as a whole. Lawmakers are still fine-tuning the details of this program, but the first implications seem promising for many small businesses.
Alternatively, businesses can secure tax credit for retaining employees. If your restaurant incurs a 50% loss compared to the same quarter of the prior year, you might be eligible for a 50% tax credit on your wage expenses. There are several eligibility requirements for this tax credit, so be sure to check with your tax professionals for further details.
What Can Consumers Expect?
All individuals over the age of 18 are eligible for a $1,200 stimulus check with some stipulations.
- Those making over $99,000 (Single Filer) will not qualify for the stimulus check.
- Those making over $75,000 (Single Filer) will receive a prorated stimulus check.
- Those making over $198,000 (Joint Filing) will not qualify for the stimulus check.
- Those making over $150,000 (Joint Filing) will receive a prorated stimulus check.
- Families with children will receive an additional $500 per child.
For those receiving a prorated check, you can expect to see a reduction of $5 for every $100 earned until evaporated. Your income will be determined by your tax filings for 2018 or 2019, whichever was last filed.
While a date hasn’t been identified, government officials have stated that they “want to get funds in the hands of Americans fast,” with many believing the payment will be coming in the next couple of weeks for those who filed with direct deposit.
How Will My Restaurant Benefit from the Stimulus Bill?
By taking advantage of the tax credits or loan forgiveness mentioned above, you can sustain your operations during this crisis. If you have fewer than 500 employees, you can apply for financial aid if needed. If your restaurant has more than 500 employees, contact your local legislature or financial advisors for alternate options.
Most restaurants will qualify for reduced or deferred payroll tax payments. If your restaurant has been forced to close or has experienced a 50% loss of revenues over the prior year, you could qualify for a 50% cut in your payroll tax costs to keep employees working. For larger businesses with more than 100 employees, this assistance is limited to only those who have been forced to close by government restrictions.
Restaurant Finances: Need Help? Here’s What to Do
If your restaurant is facing a liquidity challenge or is cash-strapped, there are several resources available for immediate help. With interest rates reaching historic lows, it has become extremely affordable to borrow money.
Talk to Local Banks and Credit Unions
If you need cash to keep your lights on and the door open, your quickest restaurant financing option is a local banking institution or credit union. The measure equips these institutions with cash for one purpose: to loan money. You should communicate the challenges your restaurant is facing and what options they have to alleviate any immediate financial pressures.
Apply for a COVID-19 Economic Injury Disaster Loan
The SBA (Small Business Association) has made it simple to apply for economic disaster relief. Fill out the form to apply.
Modifying Operations to the Environment
Restaurants of every type have been enduring the challenges posed by COVID-19. The cease of table service establishments have tested their agility to shift into curbside or to-go operations. For restaurants with the latest technology, the shift has been much more tranquil.
Offer Curbside or To-Go Services
While some table service restaurants have shut their doors in the near term, you can take advantage by offering curbside services for your guests. Restaurants with a front-of-house technology solution can easily adjust their operations to fulfill curbside and to-go service needs. Consider exploring options to streamline your off-premise processes to make it as convenient as possible.
Ensure Proper Sanitization
The health consequences of the coronavirus are unprecedented, with hundreds of people dying each day. Restaurants and all of us have a part to play in the containment of the virus.
Your restaurant should follow any CDC guidelines to prevent the spread of COVID-19, like:
- Encouraging employees to wash their hands frequently and thoroughly.
- Cleaning and disinfecting all surfaces in your restaurant with approved cleaners.
- Following social distancing orders, keeping guests and employees at least 6 feet apart.
The Stimulus Bill and Your Restaurant: Conclusion
There is no doubt that every person and enterprise has and will continue to suffer the consequences of COVID-19 until it’s spread is stalled. For many restaurant owners, this comes with tremendous fear and anxiety about their operations. Luckily, the United States government has acted to reassure small businesses with several options to obtain cash, granting them the ability to stay afloat among uncertainties. By maintaining your workforce throughout the pandemic, your restaurant may qualify for a small business grant to keep your employees paid.
It’s important to remember that periodic uncertainty is part of the business. While we may not have experienced something quite like the coronavirus, these times will inevitably end, and your restaurant will be operating with normalcy again.
We want to hear how you are shifting your operations to deal with tough times. Comment below!
Disclosure: You should always consult your financial advisor and tax professionals before making decisions regarding your finances and operations. The funds available to the loan are subject to change based on the discretion of government officials. You can read more about the full details of the COVID-19 Stimulus Bill here and access the Small Business Administration website here.
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About the Author
Forrest was the Digital Marketing Manager at QSR Automations. He graduated from the University of Kentucky with a bachelor’s in Marketing. Forrest enjoys the challenges of the evolving digital landscape. In his free time, he has strong passions for both fitness and finance. You can find him running in the park or keeping up with the latest financial trends.