The restaurant industry wants its own $240 billion bailout package, saying that the legislation passed by Congress last month makes it more appealing for its employees to draw unemployment than come back to work, Politico’s Ian Kullgren reports:
“The new Paycheck Protection Program waives repayment of small business loans if the borrower uses 75 percent of the money to maintain payroll, a measure intended to reduce layoffs. But with the expanded unemployment benefits included in the stimulus bill, some workers can as much as double their weekly checks if they stay unemployed.
“The mismatch is particularly acute for restaurants, cafes and small shops — nonessential businesses where pay scales tend to be low that have been put into indefinite hibernation. The National Restaurant Association told Congress Monday that more than 60 percent of restaurant owners believe existing assistance programs, including PPP, are insufficient to keep employees on payroll and asked for $240 billion in aid targeted to their industry.”
“Restaurants represent less than 9 percent of Paycheck Protection loan recipients, but as of March accounted for the majority of layoffs nationwide as the contagion took hold.”
The Paycheck Protection loans are meant to cover payroll expenses for eight weeks, a shorter timeframe than the enhanced unemployment benefits provided by Congress.
The National Restaurant Association also asked Congress to allow businesses to defer the start of PPP loans until local lockdown orders are lifted and to allow more than 25% of borrowed money to be used on rent and other fixed costs.
Kullgren notes that some small business advocates and lawmakers want the U.S. to implement a European-style program to provide direct payments to businesses rather than loans to help cover payroll. But, he adds, “such ideas have little traction in the current political environment.”