An exterior view of the Sweet Tomatoes restaurant, which has closed its doors on July 8, 2020 in Pembroke Pines, Florida.
Johnny Louis | fake pictures
As Covid-19 cases continue to rise in cities and states across the country, companies face a second wave of potential closings and layoffs.
The National Restaurant Association projects that 100,000 restaurants have been closed in the past two weeks under the mandates of state and local governments, as the advocacy group asks Congress for specific relief for the affected industry.
The trade group sent a letter to House and Senate leaders on Wednesday, asking for specific help for the nation’s restaurants, which are projected to lose $ 240 billion in revenue this year due to the pandemic. Some 8 million workers have been fired or suspended from March to May, the group says.
“As you work to reach bipartisan agreement on a fourth coronavirus response bill, we offer a simple message: current federal recovery mechanisms are not enough to sustain the nation’s second largest private sector employer,” it is read in the letter.
The group’s “Restaurant Revival Plan” was sent to lawmakers and features various strategies, including passing the Restaurant Law, which would provide grants through a $ 120 billion recovery and revitalization fund. It also requires that expenses covered by Paycheck Protection Program loans be tax deductible, improving the financing and terms of Economic Injury Disaster Loans and addressing business interruption claims and liability concerns for the companies.
“We are moving at this stop, start, turn on again, turn off again,” says Sean Kennedy, executive vice president of public affairs for the National Restaurant Association. “It is not sustainable and it is capital intensive for an industry that has around 16 days of working capital available, and that was before the pandemic.”
Beyond simple relief, the plan calls for a national strategy on testing and vaccines, prioritizing access to the food supply chain and agriculture.
The situation is dire for restaurants not only in the US, but worldwide as well. Facebook’s Global Status of Small Businesses Report reveals that globally, consumer-focused companies were among the hardest hit with shutdown rates due to the pandemic, with 32% of hotels, cafes and restaurants that closed at the time of the survey. The data was collected from more than 30,000 companies in 50 countries, and more than a quarter in total said they closed between January and May this year, with a third reduction in the workforce.
A second wave of PPP
Aid advocates, including the National Restaurant Association, are pushing for Congress to enact a second wave of the Paycheck Protection fund, with specific support for businesses belonging to minorities and women in underserved markets. The program has been extended until August 8 for new applications, but those who have taken loans are running out of time and capital.
A recent survey by the National Federation of Independent Business found that more than half of surveyed members had spent all of their PPP loan funds, with 44% likely not far behind.
Additionally, just under a quarter of borrowers have or anticipate having to fire one or more employees after using their loan. Of companies that have applied for PPP loans, economic injury disaster loans, or both, 46% anticipate that they will need additional financial support in some way in the next 12 months.
Almost half also say they have been affected by new changes in reopening policies, creating more economic challenges.
“It should be much more flexible for small businesses, with a broader use of funds to help businesses operate safely,” said Karen Kerrigan, president and CEO of the Council for Small Business and Entrepreneurship. The group is not asking for industry-specific aid, but is pushing for smaller, underserved companies to focus on the next aid package, and wider access to EIDL grants. “In the back, we would like to see a very simple forgiveness program and guidance from the beginning.”
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