JLG will be providing a series of updates over the coming weeks and months looking at different aspects of what the new balance of power in Washington DC is likely to mean for you and your business – small, large, cross-border, or domestic. This first installment highlights new opportunities for the hospitality sector – especially restaurants – some of which commence even before next Wednesday’s inauguration.
With the United States still enduring the humanitarian and economic pain of 4000 COVID-19 deaths per day, yesterday evening, President Elect Biden announced the first of two plans that will amount to a record-setting $1.9 trillion in stimulus and recovery funding (assuming passage due to both houses of Congress now being controlled by the Democratic Party).
Thursday’s speech focused on the first half of this endeavor, the "America Rescue Plan" (the "ARP"), designed both to curb the virus and strengthen America's financial wellbeing by providing direct aid to individuals, families, and businesses.
To supplement the bipartisan COVID relief package already passed by Congress under which all qualifying small businesses may begin applying for new Payroll Protection Plan ("PPP") loans on January 19, 2021 (regardless as to whether they received a previous PPP loan), President Elect Biden's proposed legislation will immediately add an additional $15 billion, much of which will flow directly to hard-hit restaurants.
Since the Pandemic began, approximately 110,000 of America’s restaurants (17% of all restaurants across the country) have either permanently closed or are experiencing long-term closures. In conjunction with PPP, the ARP will deploy a broad range of measures to reverse this extraordinary damage.
Where most small businesses will be limited to loans equal to 2.5 times their monthly payroll, for example, that limit will be raised to 3.5 times monthly payroll for restaurants. Additionally, the President Elect has stressed that, unlike the original PPP program, the ARP will further help the hospitality sector to protect and retain workers by subsidizing certain rental and health care expenditures, by creating a new "national partnership" with restaurants to assist laid-off hospitality workers, and by giving back to the many restaurants that have generously been contributing food donations to needy Americans throughout the pandemic.
New policing measures are planned to ensure the ARP prioritizes enterprises that were either overlooked or insufficiently funded during the first round of PPP - e.g., women and minority-owned businesses - while preventing a repeat of situations in which some aid was misdirected to large corporations. Loan applicants would be well-advised to approach the process accordingly.
Restaurants are also likely to see a boost in customer demand and worker retention from the ARP’s promise to send direct financial assistance in the form of $1400 checks to a large majority of persons in the United States including citizens, work-eligible non-citizens with social security numbers, and spouses and children of undocumented immigrants who have social security numbers.
These eagerly awaited checks, however, are not the only macro elements of the ARP expected to benefit restaurants and hospitality investors. By delivering an additional $350 billion directly to states and local governments, as well as $20 billion for a national vaccination program, $50 billion for expanded COVID testing, and funding 100,000 new public health workers, 2021 may finally deliver the precise types of relief desperately needed by an industry still struggling to sustain the cultural and economic fabric of our nation.
Exact timing remains subject to political uncertainties but the President Elect and Congressional leaders currently plan to seek fast-track passage of the ARP during the first month following President Elect Biden’s inauguration next Wednesday.
