The forgiveness application process would be simplified for smaller loans.
On Monday, GOP leadership in the Senate introduced a $1 trillion stimulus package—labeled the HEALS Act—that would deliver more checks to citizens, several tweaks to the Paycheck Protection Program, and cut enhanced unemployment benefits by $400.
In the $2.2 trillion CARES Act, unemployed workers receive an extra $600 per week on top of state and local benefits. Several operators in the restaurant industry have voiced concern over the enhanced funds because some employees have chosen to stay on the unemployment insurance as opposed to returning to work. In many cases, workers are receiving more money through the unemployment benefits than they did at their job. The deadline for the enhanced benefits will expire on Friday.
In the HEALS Act, that $600 would be slashed to $200. The extra $200 would last until September, and then in October, payments would transition to 70 percent of a worker’s lost wages. In the Democrats’ $3 trillion proposal in May, the $600 unemployment benefits would expire in January. However, the Democratic bill has been essentially ignored by Republicans in the Senate.
The new bill would also include liability protections for schools, healthcare workers, and employers to shield them from lawsuits related to COVID-19. The provision has been a strong point of division between Republicans and Democrats. But restaurant operators have shown support for it.
At a May meeting between the Trump administration and restaurateurs, RBI CEO José Cil said he expects “frivolous” and “unfounded” lawsuits against operators that are “trying to do the right thing, trying to survive.” Trump responded by saying, “The Democrats don’t want to give you the liability provisions. They just don’t want to have that. And it’s crazy that they don’t. But the Democrats do not want to give that to people, and that’s not a good thing.”
The distribution of stimulus checks to most citizens would be nearly identical to the CARES Act. Single taxpayers would receive $1,200 while married couples get $2,400. The dollar amount begins to phase out with incomes of $75,000 for single taxpayers and $150,000 for married couples. Families also receive $500 for each dependent; the only difference is the funds won’t be restricted to dependents that are 17 years and younger.
The HEALS Act also includes several changes to the Paycheck Protection Program. The revamped edition is called the Continuing Small Business Recovery and Paycheck Protection Program Act. Here are a few highlights:
- The provision would authorize $100 billion in long-term, low-cost loans to recovery sector businesses, which include “seasonal businesses and businesses located in low-income census tracts” that have no more than 500 employees and at least a 50 percent drop in revenue.
- The package provides $190 billion of funds for first-time and second-time recipients. Businesses seeking a second round of funding must have no more than 300 employees and demonstrate at least a 50 percent drop in revenue.
- Businesses cannot receive another PPP loan that would push their total funding (including the first loan) to more than $10 million.
- $25 billion would be set aside for companies with 10 or fewer employees and $10 billion set aside for community lenders.
- Unlike the CARES Act, which sets a $10 million maximum, the HEALS Act includes a $2 million maximum.
- The 60/40 allocation between payroll and nonpayroll costs remains.
- Forgivable expenses would expand to include covered supplier costs, covered worker protection expenditures, and covered operations expenditures.
- Borrowers are allowed to select the timing of an 8-week forgiveness period.
- The forgiveness application process would be simplified for smaller loans.
Other items of note in the HEALS Act Include:
- The bill includes a refundable payroll tax credit equal to 50 percent of COVID safety expenses, including testing, cleaning supplies, and PPE. The credit is capped at $1,000 for the first 500 workers, with $750 for the amount of workers between 500 and 1,000 and $500 for each employee over 1,000. Expenses between March 12 and January 1 are eligible.
- The legislation would allow 100 percent deductions for business meals through December 31. The current law maxes deductions at 50 percent. The provision is intended to assist with demand at restaurants.
- The HEALS Act includes $105 billion to help schools reopen and $16 billion for COVID testing.
The Independent Restaurant Coalition, which is pushing for the $120 billion RESTAURANTS ACT for independent operators, isn’t satisfied with the HEALS Act.
"Look around your neighborhood: there's a good chance one of your favorite restaurants or bars has closed forever. The longer Congress waits to deliver relief to independent restaurants, the more businesses risk permanently shuttering and wiping out at least 16 million jobs across the country,” the organization said in a statement.
“The changes to the Paycheck Protection Program proposed by Senator McConnell today are a good start, but independent restaurants don’t another loan when we are accumulating more debt and taking on more losses due to circumstances out of our control. A ‘good start’ isn't enough four months into the pandemic—we need immediate relief now.”