New COVID relief law helps restaurants and wineries

A year after the start of the COVID-19 pandemic, the U.S. government enacted the first federal aid directly targeting one of the hardest-hit U.S. economic sectors: food services. And it could help affected wineries as well. The American Rescue Plan (ARP), passed by Congress and enacted by President Joe Biden last week, includes $ 28.6 billion for restaurants, bars and other food service businesses. Wine tasting rooms are also included.

Why now?

This is the third major COVID assistance law passed since the pandemic began last year. A specific aid to restaurants was discussed for the second measure, but Congress chose to focus on the Paycheck Protection Program (PPP), which provided forgivable loans to companies in several sectors.

Restaurant specific aid was first offered last fall when the House of Representatives reviewed the Real Economic Support Act which recognizes the unique aid to restaurants needed to survive (RESTAURANTS). This bill proposed more than $ 120 billion in direct subsidies to the restaurant industry. (And no, that’s not the most embarrassing acronym in legislative history.) The law was passed by the House but not by the Senate, and despite appeals from the restaurant industry, didn’t has never been incorporated into the Coronavirus Aid, Relief and Economic Values ​​Act (CARES). which was enacted in March 2020. During this legislative cycle, the bill was added to the ARP, albeit at a much lower price of just under $ 30 billion.

Haven’t restaurants benefited from PPP loans?

Yes, but above all no. Many restaurants have taken out PPP loans that were offered in the first two stimulus bills. But these bills required companies to use the majority of the money to pay workers. The idea was that companies affected by the pandemic would still be able to pay their staff, which would save jobs.

For most restaurants, this turned out to be less than ideal. Because the closures forced them to shut their doors completely or switch to a limited take-out service, they could have paid staff with P3 loans, but they couldn’t cover rent, utilities, or most. other costs.

How does the new aid help?

Food and beverage venues, including vineyard tasting rooms, can apply for grants to cover expenses until February 15, 2020. Eligible expenses include mortgage and rent payments, salaries, benefits, construction of outdoor food courts and many other categories. The amount of the grants will be determined by comparing the income for 2020 to the income for 2019.

More than $ 5 billion will be set aside for small businesses with annual revenues of less than $ 500,000. Subsidies will be capped at $ 10 million for restaurant groups and $ 5 million for individual seats. Listed businesses or restaurants with more than 20 locations are not eligible.

Will this be enough?

While restaurateurs and chefs will appreciate the help, help comes too late for many restaurants. A year after the closures began, 110,000 restaurants – 17% of the industry – have closed permanently or long-term due to the pandemic, according to the National Restaurant Association. The industry lost 2.5 million jobs.

And at a price of less than $ 28.6 billion, the aid might not be enough. Monthly restaurant sales fell by more than $ 30 billion per month at the start of the pandemic. It’s now about $ 10 billion less per month, even as more states roll back restrictions on meals. As infection rates decline and millions of Americans are vaccinated every day, it’s still unclear how quickly restaurants will recover.

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