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6 Things Restaurant Owners Should Know About the Government's CARES Act

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April 09, 2020

Have questions about SBA loans, grants, and the government's Coronavirus Aid, Relief and Economic Security initiative (CARES Act)? Get the answers you're looking for from US Foods CHEF'STORE.

COVID-19 Guidance for Restaurant Owners and Food Service Workers

During these difficult times, restaurant owners and food service workers are feeling the financial effects of COVID-19. While the weeks and months to come are filled with a degree of uncertainty, we are here to help our partners navigate these uncharted waters. 

Are you struggling to understand new restaurant resources for Coronavirus? Want to know more details about the CARES Act? Your wholesale restaurant food supplier walks you through the current information below. 

COVID-19 Restaurant Relief: Overview of the CARES Act Options

1. What is the CARES Act? 

In an effort to help support small businesses that have been financially affected by COVID-19, Congress rolled out the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The CARES Act relief package allocates $2.2 trillion dollars in the form of loans and grants to help business owners and their employees during this turbulent time. The loans are meant to address sales loss, inability to pay necessary expenses, and layoffs.  

2. Who Qualifies for CARES Act Loans?

Any small business with 500 employees, nonprofits, and veterans' organizations are eligible for CARES Act loans. Restaurants and hospitality businesses qualify if they have 500 or less employees per location

Who qualifies for CARES Act loans?

3. What Are the Available CARES Act Loans?

The current talk about COVID-19 small business relief centers around two available loans: Paycheck Protection Loan (PPP) and Economic Injury Disaster Loans (EIDL). Both loans offer aid to restaurants and their employees, but differ in their amounts, interest rates, and duration. 

4. Paycheck Protection Program Loans (PPP)

PPPs can provide qualified businesses up to $10 million in forgivable payroll loans, to be used over an eight-week period between February 15, 2020 and June 30, 2020. PPPs are designed to keep employees on payroll and/or rehire laid off employees. These loans can be used for:

  • Payroll costs (including benefits and medical/dental pay)
  • Utilities
  • Mortgage interest payments

Applicants must apply, starting April 3, 2020, through a SBA-certified lender. To apply for PPP, calculate your average total monthly payroll costs, then multiply by 2.5 to determine your restaurant's available loan amount

Keep in mind there are restrictions such as:

  • The requested loan amount cannot exceed $10 million.
  • Individual employees earning more than $100,000 annually are excluded from the PPP loan amount.

Currently Paycheck Protection Loans are forgivable, after the eight weeks are over, under certain criteria. What does this mean? As long as you use this particular loan toward restaurant payroll costs, utilities, and other allowable debts, you are likely to see the majority, if not the entirety, of the loan forgiven. If you do have to pay back any of the loan, the current interest rate is 1 percent over a two year term. 

Since the logistics of PPP loans and reimbursements amounts are still in flux, make sure to keep updated on the changes. Need help figuring out payroll costs? Want to get the latest info? Refer to reputable websites, like the U.S. Chamber of Commerce and, or meet with your small business financial advisor. 

PPP Loans Can Be Used For

5. Economic Injury Disaster Loans (EIDL)

The EIDL offers up to $2 million for small business expenses such as payroll and fixed debt. To apply for EILD visit the disaster assistance website to start the application process. 

Note: the designated SBA website is the only place you can submit your application. Any other sites claiming to process applications are false.

Unlike the PPP loan, EIDL is not forgivable. If approved you can expect:

  • An interest rate of around 3.75 percent for small businesses (including restaurants) and 2.75 percent for non-profits.
  • A possible 30-year term.
  • Interest to begin accruing at disbursement. However, there is an automatic one year deferment on payment.

While the EIDL isn't a forgivable loan, you can still apply for a $10,000 EIDL emergency advance at the time of application. Simply request the advance during the application process. This $10,000 advance should deposit into your bank account within three days and functions as a grant, meaning you will not have to pay it back. 

To learn more about EIDL, contact the U.S Small Business Administration. You can also check current COVID-19 loan facts, application instructions, and more. 

6. Which Loan is Right for Your Restaurant?

Currently small businesses are able to apply for and accept both PPP and EILD loans, however it's important to keep in mind doing so could affect some of your PPP loan forgiveness. Trying to decide what is best for your restaurant? Still need more info on all the loan options? 

Consider reaching out to your local small business development center (SBDC) for free advice about your options. Your local SBDC can help you navigate available COVID-19 resources, keep you up to date on relevant news, and offer in-person guidance. 

Find a SBDC near you and get a conversation started now. 

US Foods CHEF'STORE: Your Community Partner

As a community-based company, we understand our partners' lives and restaurants are in flux. We recognize the restaurant business is undergoing changes, but our focus on customer care is unwavering. Our loyalty to our restaurant community has been our top priority and continues to be our main driving force. We will continue to provide professional services and support to our customers.

The information materials and opinions contained in this blog/website are for general information purposes only, are not intended to constitute legal or other professional advice and should not be relied on or treated as a substitute for specific advice relevant to particular circumstances. We make no warranties, representations, or undertakings about any of the content of this blog/website (including, without limitation, as to the quality, accuracy, completeness or fitness for any particular purpose of such content).

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