The National Restaurant Association sent a letter to prominent U.S. political leaders in protest of a modification to the Paycheck Protection Program (PPP) that would make most restaurants ineligible for further benefits.
The rule in question, part of the Senate HEALS Act proposed last week, says that small- to medium-sized businesses (SMBs) with under 300 employees, which can prove a 50 percent loss in quarterly gross receipts in the last year, can apply for a second round of PPP loans.
According to the association, this would result in 55 percent of restaurants not eligible for the loans. The association instead wants a 20 percent loss threshold, according to the letter, which would enable around 430,000 restaurant owners to receive more PPP assistance.
In addition, the letter calls for more protections from surprise PPP taxes. The letter says the intent of the PPP had been to provide SMBs with deductible loans, but recent IRS guidance has proved that SMBs could have to suffer unexpected taxes at a time when many are struggling.
Therefore, the letter calls for a unified codifying of intent to make sure that doesn't happen. A press release quotes Sean Kennedy, executive vice president for Public Affairs with the Association, who says a failure to fix the tax issue "undermines the survival intent of the PPP program by imposing an unexpected tax liability of 25 percent to 35 percent on forgiven loans."
“The PPP got thousands of restaurants through the spring shutdown, but most are now open under strict business limitations and every month are wrestling with their bottom line,” he said, according to the release. “A second round of PPP will make or break these restaurants, so we encourage a bipartisan agreement to lower the qualifying threshold so that more of the struggling restaurants in our communities can have a fighting chance.”
Senator Marco Rubio of Florida, who is in charge of the committee to keep the PPP working, said further action for the program would have to be more secure and only help businesses that needed it the most.