WASHINGTON (dpa-AFX) - The National Restaurant Association has sent a letter to House and Senate leadership seeking lower qualifying threshold for the Paycheck Protection Program (PPP) as the current one would make most restaurants ineligible for further benefits.
The Senate HEALS Act proposes to allow small businesses with fewer than 300 employees and that can demonstrate a 50% loss in quarterly gross receipts over the previous year to apply for a second round of PPP loans. At this threshold level, 55% of restaurants will not be eligible.
In the letter the Association appeals for a 20% threshold, which would make 430,000 restaurant owners eligible for a needed second loan. Such a change would ensure that restaurants with a low gross revenue loss, but still facing bankruptcy, would be eligible.
'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,' said Sean Kennedy, executive vice president for Public Affairs. '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.'
Further, the letter calls for more protections from surprise PPP taxes.
The tax liabilities are unexpected and a shock to thousands of restaurant operators. For example, a restaurant owner in Indiana who accessed PPP loans for his five small locations is facing a $182,000 tax burden. A Texas operator with six locations projects his tax bill will be more than $1.3 million.
'This undermines the survival intent of the PPP program by imposing an unexpected tax liability of 25%-35% on forgiven loans,' said Kennedy. 'Restaurants that obtained a PPP loan to support employees and pay bills should not be facing unexpected, unintended tax burdens that further depletes their cash on hand. These PPP expenses should not face a massive 'clawback' in the form of federal taxes.'
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