Relief

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by David Klemt David Klemt No Comments

PPP 2nd Draw vs ERTC vs RRF: What to Know

PPP 2nd Draw vs ERTC vs RRF: What to Know

by David Klemt

The face on a bank note

Some regions, states and people are behaving like the pandemic is over but our industry is still in crisis.

There is good news in the form of a few resources business owners can utilize.

Let’s take a look at the the Employee Retention Tax Credit, second Paycheck Protection Program draw, and Restaurant Revitalization Fund.

Paycheck Protection Program

Today is your last day to apply for the second PPP draw. That’s why we’re starting here and why, if you haven’t yet, you need to apply now.

According to the Small Business Administration, a borrower is (generally speaking) eligible if they:

  • previously received a first-draw PPP loan and will use (or has used) the full amount only for authorized uses;
  • have no more than 300 employees; and
  • are able to demonstrate at least a 25-percent reduction in gross receipts between comparable quarters in 2019 and 2020.

Applicants seeking a second draw need to know the following:

  • No extension date has been announced for the second PPP draw.
  • Each single borrower is limited to a $2 million loan.
  • Using the first draw as a model, the average loan size may be around $128,000.
  • The terms of second-draw PPP loans are the same regardless of who is borrowing and who is lending.

Use SBA Lender Match to find a lender today.

Employee Retention Tax Credit

When it comes to relief for this industry, much of the focus is on the PPP and RRF.

However, the ERTC can be a valuable resource for eligible restaurants.

First, what’s the ERTC? It’s a payroll tax credit—fully refundable—meant to persuade employers to keep and compensate their workers when they’re not fully operational.

Second, who’s eligible? To claim ERTC for a given calendar quarter, restaurant operators must show:

  • full or partial suspension as a result of orders from a governmental authority limiting commerce, travel or group meetings due to Covid-19; or
  • they experienced a significant decline in gross receipts during the calendar quarter when compared to 2019.

The above criteria apply to the quarter an operator is applying for the ERTC.

To better understand the ERTC, we’re including an example from the National Restaurant Association:

Henry’s Hotcakes (HH) received a $120,000 PPP loan in April 2020. These funds were fully spent on its 10 employees by September 20, 2020. Previously, HH would not have qualified for ERTC. However, HH can now reach back to its wages for the fourth quarter of 2020 (OCTDEC) and obtain up to $5,000 per eligible employee (50% credit of up to $10,000 in eligible wages) in ERTC.

Click here to read more about the ERTC on the IRS website.

Restaurant Revitalization Fund

The Restaurant Revitalization Fund is the most recent relief resource to come to fruition, so it stands to reason that it’s top of mind for most operators.

According to recent reporting, the SBA—the agency responsible for overseeing the RRF—is aiming for early April to launch the fund.

Here’s what restaurant and bar operators need to know now:

  • A grant is equal to the amount of a restaurant’s pandemic-related revenue losses.
  • Grants are tax-free.
  • To calculate a grant amount, subtract 2020 gross receipts from 2019 gross receipts. Operations must deduct first-draw PPP and second-draw PPP loans, even if they’re paid back or forgiven.
  • Any economic disaster loans—Economic Injury Disaster Loans, for example—are not RRF deductions.
  • Per the SBA, operators do not need to register for a System for Award Management (SAM.gov) account, meaning they no longer need to acquire a DUNS number.

The following are eligible RRF expenses:

  • broad operational expenses;
  • payroll, rent, and mortgage interest;
  • “normal” food and beverage inventory;
  • various supply purchases (PPE, for example);
  • property damage costs related to public disturbances in 2020;
  • debt obligations to suppliers before covered period;
  • interest payments on any other debt obligations incurred prior to Feb 15, 2020; and
  • refinancing EIDL.

Bear in mind that when it comes to the PPP, ERTC and RRF, changes in requirements and other processes are subject to change. Operators must stay up to date on these and other programs.

Disclaimer

This content is for informational purposes only, and should not be used as legal, tax, investment, financial, or other advice. This article does not constitute professional and/or financial advice, nor does any information constitute a comprehensive or complete statement of the matters discussed or the law. This information is of a general nature and does not address the circumstances of a specific individual or entity. The reader of this information alone assumes the sole responsibility of evaluating the merits and risks associated with the use of any information before making any decisions based on such information.

Image: Freddie Collins on Unsplash

by krghospitality krghospitality No Comments

On the Menu for 2021: The RESTAURANTS Act

On the Menu for 2021: The RESTAURANTS Act

by David Klemt

Much like restaurants themselves, the RESTAURANTS Act has faced multiple starts and stops.

The bill received huge bipartisan support in 2020, landing dozens upon dozens of co-sponsors.

However, that widespread support didn’t materialize into any actual progress—the bill was never signed into law. That must change now.

A Long Road

It’s February 2021. The House and Senate must work together to provide the targeted relief of the Real Economic Support That Acknowledges Unique Restaurant Assistance Needed to Survive (RESTAURANTS) Act.

The RESTAURANTS Act was first introduced to the House of Representatives on June 15, 2020. The bill was eventually included in the revised Heroes Act, which was passed by the House on October 1, 2020 on a vote of 214 to 207.

Unfortunately, that bill was “dead on arrival” and didn’t receive a vote on the Senate floor. A $900 billion stimulus package was negotiated in December of 2020 but the RESTAURANTS Act wasn’t included in it.

It has been more than long enough—it’s beyond time for action.

Where are We Now?

Throughout all of this, from inception to current status, the Independent Restaurant Coalition (IRC) has never faltered in their campaign to ensure this industry receives the targeted relief it so desperately needs.

It’s wise given how the number of times we’ve been let down by our elected officials to be guarded and cautiously optimistic about the RESTAURANTS Act finally being signed into law this month.

On February 5, Senators Roger Wicker (R-MS) and Kyrsten Sinema (D-AZ), and Representatives Earl Blumenauer (D-OR) and Brian Fitzpatrick (R-PA) formally (re)introduced the RESTAURANTS Act to the 117th Congress.

What’s in the Bill?

In its current form, the RESTAURANTS Act:

  • establishes a $120 billion relief fund for foodservice and drinking establishments;
  • makes groups that operate up to 20 units eligible for relief from that fund;
  • provides operators access to grants of up to $10 million for eligible expenses; and
  • makes the grants retroactive to February 15, 2020 and ends them eight months after the legislation is signed into law.

New provisions in the February 2021 RESTAURANTS Act include:

  • updates to the award calculation based on annual loss from calendar year 2020 instead of quarterly;
  • grant eligibility for new restaurants that opened after January 1, 2020;
  • paid sick leave as an eligible expense for employees, with a bonus amount to cover the cost of voluntarily providing ten days of sick leave to employees;
  • providing the Department of the Treasury the discretion to help reduce waste, fraud, and abuse;
  • imposing reporting obligations on the Department of the Treasury to share who gets loans and demographic information about recipients; and
  • ensuring that restaurants can use both the Employee Retention Tax Credit and the RESTAURANTS Act grant program, provided they are not used for the same expenses.

What’s Next?

We must all act to give the RESTAURANTS Act the best chance of becoming law. We have been patient for long enough.

We must let our representatives know we expect them to pledge their support for this bill formally.

The IRC provides several methods for ensuring our representatives understand they need to co-sponsor and pass the RESTAURANTS Act:

  1. Email your representatives and ask them for their co-sponsorship.
  2. Call your representatives directly and tell them why restaurants and bars need the RESTAURANTS Act to be voted on, passed, and signed into law. This is the number to dial: (202) 224-3121. The IRC has provided talking points here.
  3. Share the graphic below on your social channels and encourage your followers to also contact their representatives and ask them to co-sponsor the RESTAURANTS Act. Use the following caption when posting: It’s official: the RESTAURANTS Act of 2021 is on the menu in both chambers of Congress. Call your representatives today and tell them that independent restaurants, bars, and workers can’t wait any longer for direct relief: 202-224-3121 #SaveRestaurants

All of that will take less than 20 minutes. That’s not a lot of time to help finally get this industry the support and relief it needs.

The RESTAURANTS Act is needed to prevent more permanent restaurant and bar closures, and to revitalize the industry. The road to recovery is a long one and getting this bill signed into law is a major step forward.

Please email and call your representatives. Please share the post and caption above on your social media. Please help save the restaurants, bars, and millions of people they employ.

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by David Klemt David Klemt No Comments

Tobin Ellis and Barmagic’s Relief Dashboard Contains Hundreds of Restaurant and Bar Resources

Tobin Ellis and Barmagic’s Relief Dashboard Contains Hundreds of Restaurant and Bar Resources

by David Klemt

In keeping with this week’s focus on good news, KRG Hospitality would like to shine a light on Barmagic’s Bar & Restaurant Revival Guide.

First, some background.

Tobin Ellis founded Barmagic of Las Vegas in 1997. He’s done so much for the hospitality industry that it feels almost criminal to just attach a few labels to describe him, but here we are.

Ellis is a hospitality industry innovator, advocate, designer, marketer and consultant. Anyone who has ever attended an hospitality trade show and sat in on a presentation, panel or Q&A session featuring him knows he’s passionate, quick-witted, real-world solution-oriented, and doesn’t suffer pretenders lightly.

He’s also more than put in the work to for the recognition he deserves as an industry icon. Ellis has been in the trenches for decades, beginning his hospitality journey washing dishes in upstate New York. He has worked around the world in essentially every type of venue, from sleepy dives to hyperkinetic high-volume cocktail bars, and everything in between.

A few years back, Perlick partnered with Ellis to create the Tobin Ellis Signature Cocktail Station. This innovative hardware was designed with ergonomics in mind, focusing on improving bar team member’s physical comfort and safety.

Since restaurants and bars found themselves fully in the devastating and nearly inescapable grip of the pandemic, Ellis has focused on the health and longevity of the industry as a whole.

To help operators navigate the pandemic and the myriad challenges (again, a criminal label for what operators and workers have been facing for almost 12 months) it continues to present, Ellis added a Hospitality Relief dashboard to the Barmagic website.

Visitors will find hundreds of links for US- and Canada-based resources, including a relief map for those who need aid or who want to donate to relief efforts. There’s also a link to the Barmagic Bar & Restaurant Revival Guide, a 96-page download loaded with information and ideas that Ellis hopes “might just spark a thought or two” in the minds of restaurant and bar owners, operators, leaders and workers.

We’re not going to get through this if we don’t come together, save as many businesses as possible, and help new venues open and flourish. We applaud the Barmagic relief resources—more like this, please.

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by David Klemt David Klemt No Comments

“More help is on the way.” But not for restaurants and bars.

“More help is on the way.” But not for restaurants and bars.

by David Klemt

Speaking about the economic relief package, Senate Majority Leader Mitch McConnell (R-KY) struck what can be generously described as tainted altruism.

“More help is on the way,” said McConnell on the Senate floor on Sunday. He also took the time to attempt to absolve Republican leadership of any blame for the glacier-paced movement forward on relief, laying the fault at Democrats’ feet.

To be blunt, both parties have failed the American people and small businesses in terms of providing federal assistance during the pandemic.

After months of inaction on relief—with the exception of a Congressional vote in September that failed to pass in the Senate—and weeks of discussions and partisan sniping, negotiators finally managed to zero in on a bill with a strong likelihood of becoming law.

Yet sifting through remarks made by some politicians regarding pandemic relief over the course of the past several months, variants of the word “prompt” were bandied about.

If the package passes—which is expected to happen later today—members of Congress and Senate will no doubt perform self-congratulatory victory laps for finally doing their jobs after months of failing to do much of anything in the way of relief. Meanwhile, millions of Americans will continue to face life-altering challenges, reaching out for lifelines that are simply not there.

Included in the package are a number of details identified as “key” to both political parties:

  • The ability for businesses that had received Paycheck Protection Program loans which had been forgiven to deduct the costs said loans covered on their federal tax returns.
  • Speaking of the PPP, it will be reopened with over $284 billion intended for small businesses.
  • $12 billion in available PPP funds for minority-owned and “very small” businesses.
  • $15 billion made available in PPP funds specifically for independent movie theaters, live music venues, and cultural institutions like museums.
  • $600 stimulus checks for qualifying adults (and each child in a household) who earned $75,000 or less in 2019. The amount would be reduced for people who earned more. Those who made $99,000 or more last year are not expected to receive a stimulus check.
  • A $300 boost to unemployment benefits for 11 months, with a possible implementation date of December 27.
  • Gig and contract workers enrolled in the PUA or PEUC programs can expect the same $300 boost to their benefits for 11 to 13 weeks.
  • The deadline to spend billions of dollars made available to cities and states via the CARES Act is expected to be extended from the end of this year to be an entire year.
  • $25 billion in emergency assistance for renters.
  • A moratorium on evictions expected to be extended through the end of January.

What’s not in the package expected to be rushed through Congress? Hundreds of billions of dollars in state and local aid Democrats wanted, liability shields for corporations Republicans wanted, the $120 billion RESTAURANTS Act, or the $240 billion Restaurant and Foodservice Industry Recovery Fund.

Despite McConnell’s declaration that federal assistance is on the way, the economic relief plan leaves an industry that employs millions of American workers and contributes hundreds of billions of dollars to the nation’s GDP (four percent before the pandemic) to fend for itself.

Guy Fieri, in all seriousness, has done more for more unemployed restaurant workers than the government, raising more than $21 million in relief funds in under two months.

The hospitality jobs lost due to Covid-19 aren’t expected to return. With more than 110,000 restaurants closed—and counting—the economic impact will be felt nationwide and, in all probability, have global ramifications.

The PPP turned out to be an absolute farce: billions of dollars went to businesses that are anything but small by definition. There’s little reason to believe the process will improve much (if at all) this time around.

And while restaurants and bars have been crucial to nurturing community, connections and culture since inception, they’re clearly not considered culturally relevant institutions by politicians.

With Congress facing an uphill battle in terms of drafting the language for the relief bill and then voting on it, expecting our elected officials to propose, negotiate, draft and vote on a bill for the hospitality industry seems foolish. That means the earliest the industry can expect help—which seems exceedingly unlikely to ever materialize—is in late February of 2021.

Apparently restaurants, bars, and the foodservice professionals they employ aren’t key to politicians on any side of the aisle. Well, not until they need venues to host their campaign fundraisers, that is.

Image: Andrew Seaman on Unsplash

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