Interview

The Federal Stimulus Bill and Your Restaurant

April 3, 2020

Our Q&A with Lee Jacobs of Helbraun Levey plus answers to your FAQs

The Federal Stimulus Bill (CARES Act)

Updated on June 16th, 2020

With the economic threat caused by the COVID-19/Coronavirus pandemic, the United States government passed a historic $2 trillion stimulus bill to provide much-needed relief and aid to American businesses and workers. This bill contains a multitude of small business loans and direct payouts to American citizens. In some cases, these small business loans are forgivable, ensuring that businesses, such as restaurants of any size, can continue to pay rent and utilities on time while continuing to employ or rehire employees while government mandates to remain closed to the public remain.

With any piece of legislation, understanding it can be complicated. As operators have more questions than answers, we held a Q&A with Lee Jacobs, Partner & Chair - Employment Practices Group at Helbraun Levey, a premier law firm in New York City for bars, restaurants, hotels, chefs and all food and beverage outlets. Hosted by our Co-Founder and CEO, Krystle Mobayeni, Jacobs answered your questions while providing a clear understanding of the loans and programs restaurants have at their disposal. Watch a recording of the Q&A below:

***Disclaimer: The content of this article is not legal advice***

Q&A: The Federal Stimulus Bill and Your Restaurant

Click Here to Watch Q&A: The Federal Stimulus Bill and Your Restaurant

Paycheck Protection Program Update

On Friday, June 5th, meaningful changes to the Paycheck Protection Program (PPP) were signed into law that makes access to capital more compelling for your business. These changes include increasing the expense forgiveness period from 8 weeks to 24 weeks, reducing payroll forgiveness threshold from 75% to 60% and changing the safe harbor date from June 30, 2020 to December 31, 2020.

If you haven’t yet received funding, you can apply (or re-apply) now through a clear PPP application process with our partners at Funding Circle, a lending platform for small businesses.

What materials do I need to apply?

Most recent business bank statement that includes transactions on February 15, 2020
A copy or copies of official identification for 20%+ of all owners
A voided check

Additional documentation for verification will be required, depending on whether you are a sole proprietor or corporate/LLC. More information here.

I already applied during the first and second rounds and didn’t hear back. Do I need to reapply?

No, you do not need to reapply but if you haven’t yet been approved, you can apply again, as small and medium-sized businesses can submit a PPP application with multiple lenders.

What is PPP? Can you explain?

The Paycheck Protection Program is an SBA (Small Business Administration) 7(a) loan designed to help small businesses impacted by COVID-19 retain their workforce. For all small businesses, the Paycheck Protection Program has the following terms:

Fixed interest rate of 1.00%
No payments for the first 6 months
2-year term repayment
Loan forgiveness of up to 100% of the principal amount

Is my restaurant eligible?

All businesses that were in operation before February 15, 2020 – including sole proprietorships, self–employed individuals, and independent contractors – with 500 or fewer employees can apply.

What is Funding Circle? Why should we trust them?

Funding Circle is a global small-business loans platform. They manage everything from reviewing applications to collecting and distributing loan payments and make the entire process quick and easy for small businesses and investors alike. Their global leadership team and Board of Directors hold extensive experience from some of the world’s leading financial services companies, including Bank of America, Barclays Capital, Goldman Sachs, and J.P. Morgan.

What is BentoBox’s relationship to Funding Circle?

BentoBox has been searching for ways to make it easier for restaurants to apply and receive funding, and selected Funding Circle as a partner with the best reviews, a strong background, and fast turnaround and responsive support that we stand for ourselves.

Where can I begin the application process?

You can begin the process through Funding Circle here. You’ll also find additional FAQs regarding the COVID-19 emergency business loans.

What are the benefits of going through Funding Circle for the application process?

Streamlined process with a fully knowledgeable PPP team who can accurately and quickly answer questions
Funding Circle is an approved lender for PPP
Their team answers calls and follows up with Borrowers who have submitted an application. Lots of other lenders are currently overwhelmed and are taking days, if not weeks, to return calls to Borrowers in regards to PPP. With Funding Circle, Borrowers can be assured they will actually get someone on the phone and have a direct point of contact to help them through the loan process.

Additional FAQs

We received additional questions that we weren’t able to cover in the webinar. We covered them below with the help of Helbraun Levey.

Can you clarify how the Paycheck Protection Program (PPP) turns from a loan to a grant?

Technically speaking, the PPP is a loan – but if you comply with certain requirements, PPP loans can be fully forgiven.

How do we show that we are using government funds for the appropriate expenses? What is the term/length of the loans typically?

Though each lender will probably have different requirements for their loan forgiveness applications, we expect that you will have to provide extensive documentation of all spending for the 8-week period covered.

Should I base the bi-weekly payroll amount from before or after we laid off our servers?

PPP loans can be up to 2.5x the borrower’s average monthly payroll costs incurred between February 15, 2019 – June 30, 2019, not to exceed $10 million. For newer businesses, you’ll use the average monthly payroll costs incurred between January 1, 2020, and February 29, 2020.

If our employees are receiving unemployment until June 30th, then can we hire back employees on June 29th and pay them for the next 8 weeks using a loan from the PPP?

You can do this, but your loan will not be eligible for forgiveness. Your PPP loan proceeds will need to be spent during an 8-week period of time that ends no later than June 30, 2020, in order to be considered for forgiveness. Only the amounts spent on payroll costs, mortgage interest, rent, and utilities during that period could be forgiven.

You mentioned the PPP is for rent and mortgage, too. How does that work?

While a portion of your PPP loans can be used for those purposes, the federal government anticipates that you’ll need to spend approximately 75% of a PPP loan on payroll costs in order to be considered for full loan forgiveness. So, to have any hope to apply for loan forgiveness, only 25% of the loan can be used to pay for rent, utility, and/or mortgage interest costs.

We've already applied directly for a Small Business Administration (SBA) disaster loan and a loan through our bank, but have not yet received any funds. Will that affect our eligibility to get this loan?

Based on the guidance released by the Small Business Administration (SBA), no.

I have heard conflicting reports that the CARES Act loans will or will not need to be personally guaranteed. Can you confirm the facts?

PPP loans will not require a personal guarantee, but Economic Injury Disaster Loans (EIDL) may, depending on the size of the loan. Please note that, while PPP loans do not have a personal guarantee requirement, any unauthorized or fraudulent use of your PPP loan proceeds may result in federal criminal charges.

What if you are a start-up that opened in Jan of 2020 and don’t have the required support for forgiveness or 3 months’ history?

PPP loan amounts can be calculated using your payroll costs from January and February.

Will your firm help apply for loans?

Helbraun Levey has a team of experts that can help put together all of the applications (there are two SBA Federal applications, and one NYC application if you are located in NYC.) We are offering this on a flat-fee basis to assist with anyone or two of them, or all three of them. We put together a winning application on the back-end so that this is done quickly and efficiently. For information on this package specifically, please contact loanhelp@helbraunlevey.com for more information including the packages we are offering and our flat-fee pricing.

Additional Information:

Want More Information?

Coronavirus Legal Questions:hotline@helbraunlevey.com

Loan Help Information:loanhelp@helbraunlevey.com

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