Now that the Senate approved a $900 billion COVID-19 relief package late Monday, hours after it passed the House of Representatives, restaurants can begin to sift through the massive 5,500-page-plus document to see what lifelines it might offer as a daunting winter season closes around operators nationwide.

Andrew Rigie, executive director of the NYC Hospitality Alliance, said the stimulus’ main component—another round of the Paycheck Protection Program—is “merely a Band-Aid on a cannon wound.”

Let’s dive into a legislative assessment of the bill, as broken down by the National Restaurant Association, to see if some potential bright spots emerge.

READ MORE: Another relief package promises help, but no direct aid for restaurants

As an overview, there are essentially six items that could benefit restaurants. The PPP is the biggest.

Paycheck Protection Program, what’s changed, what hasn’t

The package includes $284 billion in this PPP go-around. It will allow restaurants to access a second draw at 3.5x monthly payroll for businesses under NAICS 72 (versus 2.5x for other sectors). A restaurant selects its monthly payroll as an average of either, one, monthly payroll for 2019, or two, the monthly payroll for the 12-month period before the origination of the second PPP loan.

How has this changed? For eligible restaurants, the second draw is for a larger amount than the original PPP loan number. The two options for average payroll reflect the hiring/rehiring challenges of COVID-19, the Association said.

The maximum amount is $2 million.

How has this changed? It’s reduced down from $10 million, which is a significant flip. As everyone in the industry recalls, there were some larger chains that accessed $10 million PPP loans before. Shake Shack was one, but soon gave the money back.

Businesses must demonstrate a 25 percent revenue loss in gross receipts for any calendar quarter of 2020 when compared with the same quarter in 2019 to be eligible. The threshold was originally proposed at 50 percent.

How has this changed? Simply, this eligibility threshold was not in the original PPP.

Businesses with 300 or fewer employees are eligible.

How has this changed? This represents another tangible shift. The last edition set the employer size limit at 500 employees. As evident, much of the changes are intended to funnel funds into small businesses.

Restaurant and lodging businesses secured an explicit carve out, the Association said, which allows them to satisfy eligibility size (per location) requirements if they have 300 or fewer employees per location (versus collectively for other industries).

How has this changed? This explicitly preserves the original PPP’s intent, but adjusts the figure to 300 employees rather than 500 employees. Why is this important? It opens the pool for franchisees, just like it did last time. Only now it’s a 300 versus 500 employee conversation.

Speaking of such things, restaurant and lodging businesses are not subject to SBA Affiliation Rules that could limit a franchisee’s ability to access a loan in the program. The waiver of affiliation restrictions permits otherwise eligible NAICS 72 companies, who are affiliated with a common franchisor company, to access a second PPP loan.

How has this changed? This provision, explicitly included in the recent legislation, provides the same waiver as the previous PPP round. Essentially, franchisors can get back to helping operators secure loans throughout their systems.

PPP second draw loans are forgivable when spent on eligible expenses (60 percent payroll/40 percent non-payroll) during a specific timeframe.

How has this changed? It hasn’t. It’s a carry-over from the Paycheck Protection Program Flexibility Act passed in June. Originally, the PPP required operators to spend 75 percent of the loan on payroll to earn forgiveness, or the so-called 75/25 rule. But restaurants pushed back, especially in high-dollar markets like New York City where 25 percent didn’t come remotely close to helping cover other expenses. So the second round of the PPP is sticking to the summer changes.

Concerning forgiveness, funds must be spent within either eight weeks or 24 weeks of loan origination, the choice of the borrower (another Paycheck Protection Program Flexibility Act change). As noted, 60 percent of expenses must be spent on payroll costs (paychecks and group insurance, or retirement benefits) to maximize forgiveness.

How has this changed? Like the 60/40 position, it’s the same adjustment as June.

There are new forgivable non-payroll expenses, however. Eligible protective personal equipment (PPE), cleaning products and services, reconfiguration of spaces to enable social distancing, and supplier costs (perishable goods is one example, the Association pointed out) can be forgiven non-payroll expenses.

How has this changed? The change is that these aforementioned options are newly eligible PPP expenditures. And rightfully so, as far as operators are concerned. According to a Coca-Cola study in September, restaurant owners have invested an average of $7,400 for these various COVID-19 operating essentials. Sixty-six percent of operators said it would take at least six months to recoup the expense. On a larger scale, Dominos said in Q3 it spent $11 million with hiring, bonuses, sick-pay policies, and sanitary supplies.

For round one and two PPP loans, businesses using PPP funds for allowable business expenses can deduct those expenditures from their taxes.

How has this changed? This time, PPP borrowers are permitted to retain up to 37 percent of their loan funds by restoring deductibility, which was previously denied by the Department of Treasury.

For borrowers of $150,000 or less, a simplified two-page progress will be available to streamline loan forgiveness.

How has this changed? The Association said it’s an improved process previously unavailable.

The new program repeals the provision that required PPP borrowers to deduct their economic injury disaster loan (EIDL) advance grant form their PPP loan forgiveness amount.

How has this changed? It represents a correction of the CARES Act.

Due to an SBA rule in August, rent paid to a “related party” with similar ownership interest was not a forgivable expense.

How has this changed? Congress did not address the issue of allowing “related party” rent forgiveness.

Certain 501(c)(6) nonprofit organizations with fewer than 300e employees are eligible for a PPP loan, if they do not receive more than 15 percent of their revenue from federal lobbying activity.

How has this changed? It was not an eligibility category before.

The program includes new support for first-time PPP borrowers with 10 or fewer full-time employees, second-time PPP borrowers with 10 or fewer full-time employees, first-time PPP borrowers who have been made newly eligible, and second-time returning PPP borrowers.

How has this changed? Naturally, it was not in the first version considering there were no “second-time returning PPP borrowers.”

Monday’s version also prohibits PPP loan proceeds from being used for lobbying activities.

How has this changed: This is a new element as well.

Some other things to mark

Here are four other items the Association said could benefit restaurants.

Tax deductibility (a spotlight from the PPP): Businesses can deduct allowable business expenses paid with PPP loans, including payroll, rent, mortgage interest, utilities and other allowable expenses. This applies to either a first draw or a second draw PPP loan.

Employee Retention Tax Credits (ERTC): ERTC will be available for the first two quarters of 2021 and will allow certain employers to take up to $7,000 per eligible employee retained during these two quarters. Employers who received a PPP loan may still qualify for ERTC on wages that are not paid for with forgiven PPP funds

Work Opportunity Tax Credit (WOTC): WOTC is extended by five years, granting support for restaurants that hire, train, and retain employees from target groups

Expanded the Business Meal Deduction: Business meals are now 100 percent deductible for 2021 and 2022.

Temporary Enhancements to SBA (non-PPP) Lending Programs: Four things here to consider.

  • Increases 7(a) loan guarantee to 90 percent with no fees
  • No fees for 504 loans
  • Extends CARES Act principal and interest waiver for new and existing 7(a), 504, and micro-loans
  • For loans taken prior to the CARES Act, allows three additional months of principal and interest paid by the government; restaurants authorized to take an additional five months beyond the three
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