The CARE Act Payroll Protection Program (PPP) looks great on the surface, but what does it mean for restaurants who have laid off workers and are struggling to survive? Although the NRA is lobbying to make much needed amendments to the program, here is what you need to know now.
Do I Qualify? YES!
Even if you have more than 500 employees between multiple restaurant locations you qualify because restaurants and franchises fall under NAIC Sector 72: Accommodation and Food Services and are exempt from the employee count cutoff. YES! Even if you have laid everyone off, you still qualify for PPP for all of those employees. Note: Independent Contractors (1099) do not count as employees and will not be covered under PPP.
How to Use.
Pay rent, pay mortgage interest, pay utilities, pay employees, or choose to hire back employees.
Important Items to Note:
You must use funds within 8 weeks from the date when the loan is distributed to qualify for loan forgiveness. Payroll and benefits (must equal 75% of loan expenditures)
Any money used for unqualified things will not be forgiven.
Example: a restaurant only uses 60% on payroll, they will be responsible for the remaining 15% since they did not meet the 75% requirement.
What Will I Receive?
Funds are determined by 12 previous months of payroll and benefits. Loan amount will be 2.5 times the cost of payroll. Funds are meant to keep you operating and in business until you can reopen your doors.
You are not alone. Many business owners want to take advantage of this safety net, but simply do not know how or where to start the process. Engage with your trusted lender, bank, lawyer, and/or CPA to make the process as easy and streamlined as possible for you.
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