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Restaurants Can Take Advantage of Funding Opportunities Created by Interplay of Stimulus Laws

Multiple stimulus packages enacted since March 2020 have created, expanded and extended avenues for restaurants and the food-service industry to access funding during the COVID-19 pandemic. The intersection of these laws and provisions provide additional opportunities to offset some financial losses.
woman placing a menu outside a restaurant for customers

Update (4/30/2021): The Small Business Administration opened the portal for businesses to create an account (username and password), which is needed to apply for a Restaurant Revitalization Fund (RRF) award. Businesses will need a valid email address and cell phone number to start an account. The application process opens at noon (ET) on May 3, 2021.

The SBA strongly recommends businesses use the weekend prior to the opening of the application portal to consult with their accounting professional and legal counsel to ensure they have all the supporting documents required to complete the process. They have provided a recorded webinar to assist businesses with the application process.

Note: Businesses that use Toast or Square payment terminals do not need to register with the SBA site and should apply for RRF awards through those organizations’ respective websites.

The SBA has established a Call Center, open 8 a.m. to 8 a.m. Monday through Friday, to answer questions. The number is (844) 279-8898.

The passage of the American Rescue Plan Act in March 2021 impacted provisions from several previous COVID-19 stimulus laws, most notables the Coronavirus Aid, Relief and Economic Security (CARES) Act and the Consolidated Appropriations Act, 2021.

The most recent law also created a funding source for restaurants and food service businesses — one of the hardest-hit industries during the pandemic — with the $28.6 billion Restaurant Revitalization Fund.

Some changes were simply extensions of deadlines or expansions in eligibility, others affected tax credit percentages that potentially could save your business money while some could impact compliance requirements.

The following charts show the interplay of each of the laws and how provisions have been affected and is intended as an overview and resource to help you make more-informed decisions on what funding options suit your business needs.

It started with the CARES Act and the introduction of the Employee Retention Tax Credit. This credit could be claimed against 50% of wages paid, up to $10,000 annually per employee, between March 13 and Dec. 31, 2020, that were not forgiven or expected to be forgiven payroll costs, and can include a portion of the cost of employer provided health care. Although recent laws have expanded and extended the credit, if you claimed it on wages paid between the above dates, then the details of the provision at the time are in effect.

The Paycheck Protection Program also began under the CARES Act with the intent to provide funding — up to $10 million in loans per eligible borrower — to businesses with fewer than 500 employees to be used to cover payroll and other expenses such as mortgage, rent or utilities. These loans can be forgiven completely if funds are used for covered expenses and employers kept their employees working or hired back those who were laid off.

How Paychex Can Help

Employee Retention Tax Credit

Details about changes to the employee retention tax under stimulus laws

Our Tax Services also can help identify whether you are eligible for the credit and help with claiming the incentive. If you decide to claim this credit retroactively, there are multiple factors you’ll need to take in to account, including different tax rate percentages depending on which year wages were paid in.

An updated Form 941 is required from the IRS to claim the credit. Paychex Taxpay® can be used to amend your tax returns and additional fees might apply.

We also provide addition resources:

Paycheck Protection Program

Details about changes to the Paycheck Protection Program under stimulus laws

With the extension of the application deadline to May 31, 2021, you have more time to apply for a loan. There also are other funding options to consider such as an Economic Injury Disaster Loan (EIDL), and when the time comes to apply for loan forgiveness, we have tools and resources to help.

Restaurant Revitalization Fund

Details about the Restaurant Revitalization Fund introduced under the American Rescue Plan Act

Paychex simplifies regulations by providing trusted expertise, tools and resources, including:

Our HR Services can help make recruitment more efficient as you re-staff after layoffs while the expertise of our HR professionals can assist you in more thoroughly understanding the procedures and compliance obligations necessary to bring back employees safely to the workplace.

Paychex developed an integration between Paychex Flex® and the Clover® platform — available in the Clover® App Market — that helps businesses gain more flexibility to control costs, manage staffing and overtime while handling scheduling and shift swaps.

Plus, by adding Paychex Flex® Time, tracking employee time becomes simpler with all data integrated on a single platform, which helps prevent errors and enhances compliance. Employees also gain advantages with access to click-to-chat HR from anywhere and any device — a real time-saver.

We also have integrations with more than 200 leading software solutions for accounting (QuickBooks Online®, Sage Intacct®, Xero™), hiring (Indeed), HR (BambooHR) and more to help make it simpler for those in the restaurant industry to focus on running their business.

We can help you tackle business challenges like these Contact us today

* This content is for educational purposes only, is not intended to provide specific legal advice, and should not be used as a substitute for the legal advice of a qualified attorney or other professional. The information may not reflect the most current legal developments, may be changed without notice and is not guaranteed to be complete, correct, or up-to-date.

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