On this week’s episode of Restauranttopia we have James Romano talk about everything you need to know about the SBA Restaurant Revitalization Fund, 2nd PPP, and the Employee Retention Credit.

Second round PPP

  • Need to be down 25% any quarter 2020 compared to 2019
  • Restaurants get 3.5 months (as opposed to 2.5 months with the first PPP) of payroll costs.
  • Have 24 weeks from receipt of funds to use up the monies
  • Can be used for more items than the first round – payroll, rent, utilities, AND payments to suppliers (like Hillcrest) PPE supplies, software, and property damage
  • Completely non-taxable AND you get to deduct the expenses you use the monies for. 
  • Information is at – COVID-19 relief options (sba.gov)
  • Apply – the best way is with your current bank.

Employee retention credit for 2020

  • For wages between 3/12/20 to 12/31/20
  • Had to have 50% reduction in a quarter compared to the same quarter of 2019 or subjected to partial/full shutdown.  Every restaurant with sit-down in Ohio is essentially eligible as we have been subject to Dewine’s order to have social distancing between tables.  Here is the example from the IRS proving that this counts –

The following month, under a further governmental order, Employer F is permitted to offer indoor dining service, in addition to outdoor sit-down and carry-out service, provided that all tables in the indoor dining room must be spaced at least six feet apart. Under the facts and circumstances, the governmental order restricting the spacing of tables limits Employer F’s indoor dining service capacity and has more than a nominal effect on its business operations. During this period, Employer F’s business operations continue to be considered to be partially suspended because the governmental order restricting its indoor dining service has more than a nominal effect on its operations.

  • If have fewer than 100 employees get
    • 50% of the first 10,000 in wages paid
  • If have over 100 employees get
    • 50% of the first 10,000 wages paid only for employees paid to not work
  • Process of getting monies is simply amending, or having payroll company amend 941 quarterly payroll tax return
  • Related individuals not eligible for the monies
  • IRS will send a check for the monies
  • Have to reduce expenses by monies received.  So if had 500,000 in wages for the year, and get a 50,000 dollar retention credit payment, only get to deduct 450,000 in wages on tax return.  Still amazing though as is free money
  • Has to be coordinated with PPP expenses i.e. can’t use the same payroll expenses for both.  Not hard to do, just an FYI.
  • Apply – through your payroll service provider/accountant – whomever prepares your payroll tax returns.

Employee retention credit for 2021

  • For wages between 1/1/21 to 12/31/21
  • Have to be down 20% from the comparable 2019 quarter.  So for instance if want to claim for first quarter 2021 would need to be down 20% comparing first quarter 2021 to first quarter 2019.  HOWEVER they also qualify if not down, but are still subject to a government order resulting in a partial shutdown of business.  Your customer can be up in 2021, and STILL GET THIS CREDIT if they have indoor dining (see above example) as long as Dewine’s distancing order is in effect.  THIS IS HUGE. 
  • If have fewer than 500 employees get
    • 70% of the first 10,000 in wages paid PER QUARTER. 
  • Process of getting monies can set up with payroll company now to amend first quarter AND have payroll company set up to automatically file for it with 941 form.
  • Related individuals not eligible for the monies
  • IRS will send a check for the monies
  • Have to reduce expenses by monies received.  So if had 500,000 in wages for the year, and get a 50,000 dollar retention credit payment, only get to deduct 450,000 in wages on tax return.  Still amazing though as is free money
  • Has to be coordinated with PPP expenses i.e. can’t use the same payroll expenses for both.  So for example if your period of time someone uses for second round PPP expenses is 4/15 to 7/15 you cannot take the employee retention credit during that time.  But can use it both before and after.
  • Apply – through your payroll service provider/accountant – whomever prepares your payroll tax returns.
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Restaurant Revitalization – SUPER IMPORTANT HAVE TALKED TO MANY RESTAURANT owners and many don’t know this exists

Relief is finally here!!! Funds have been made available by the Small Business Administration (SBA) through the $28.6B Restaurant Revitalization Fund (RRF). As funds are limited, we encourage you to learn more and submit your application today. 

  • Get the difference in revenues for 2019 compared to 2020, subtracting any PPP funds received.  So for example you have a customer who did 2 million in sales in 2019.  And did 1 million in 2020.  And they received 300,000 combined in the first/second PPP.  The math is 2,000,000 – 1,000,000 – 300,000 = 700,000 dollars.  That is right, in this scenario they would get 700,000 dollars.  Maximum can receive is 5 million per single location, 10 million per group.
    • If opened at some point in 2019 take the average monthly revenues and annualize them.  For instance, if opened July 1, 2019 and did 500,000 dollars from then until 12/3/19.  That is 83,333 per month so would use 1,000,000 as annualized sales.  Then calculate same as above, comparing annualized sales to 2020 numbers and subtract PPP.
    • If opened between 1/1/20 and 3/10/21 still possibly eligible  Take eligible EXPENSES (defined below)  minus the revenues from 1/1/20 to /3/10/21, minus any PPP.
  • Have until March 11, 2023 to spend the money on eligible uses
    • Eligible uses are payroll, rent, mortgage, debt, utilities, suppliers (like Hillcrest), PPE, construction of outdoor seating, maintenance.  Essentially everything other than buying a Ferrari.
  • Able to apply starting noon May 3rd
    • Although you can apply May third for the first 21 days the program will be prioritizing funding to businesses at least 51% owned by women, veteran, and the following minorities (Black, Hispanic, Native American, Asian American, and Pacific Americans).   Even though your customer may not get funding right away, have them apply right away anyways to get in line.
  • And the best part – the money is similar to the PPP – tax free AND you get to deduct the expenses you use the monies on.
  • To Register: https://restaurants.sba.gov
  • Info: Restaurant Revitalization Fund (sba.gov)
  • Application Sample: Restaurant Revitalization Funding Application Sample (sba.gov)

Relief is finally here!!! Funds have been made available by the Small Business Administration (SBA) through the $28.6B Restaurant Revitalization Fund (RRF). As funds are limited, we encourage you to learn more and submit your application today. 

Questions?


• Call the SBA hotline at 844-279-8898 (Monday-Friday 8am-8pm ET), reach out to your local SBA District Office for tailored regional SBA support, or visit the SBA website at ww.sba.gov/restaurants


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