Help for Restaurant and Retail Organizations During COVID-19


Social distancing is essential for limiting the spread of COVID-19 across Louisiana, a state already hit hard by the pandemic. But this has had devastating effects on restaurants and retail businesses who tend to rely on foot traffic to drive sales. Loans and financial aid for small businesses have been expanded under the CARES Act to help these organizations.

On Tuesday, April 7, 2020, Baton Rouge’s Mayor-President Sharon Weston Broome hosted a Small Business Development webinar to help restaurant and retail businesses learn about the financial resources available to them during this crisis.

As the owner of a restaurant or retail establishment, you have options for financial assistance to support your business during the COVID-19 pandemic. Here’s what you need to know.

Support Employees Through the Payroll Protection Program

For restaurants or retail establishments struggling to maintain payroll, the Payroll Protection Program (PPP) may be the best loan option. PPP loans are delivered directly through a lender but are guaranteed through the Small Business Administration (SBA). The maximum loan amount is 2.5 times average payroll costs, capped at $10 million, has a 2-year maturity and a 1% interest rate. The initial payment will be deferred for 6 months. The purpose of the PPP loan is to help small businesses maintain payroll through COVID-19-related economic hardship. 

The borrowed amount is eligible for full forgiveness if at least 75% of the loan amount goes towards payroll. The other 25% can be spent on rent, interest on a mortgage or utilities. Payroll must be maintained for at least eight weeks. Employers who decrease wages or salaries by more than 25% for employees who made less than $100,000 in 2019 will have the forgiven amount reduced. 

Forgiveness will not occur automatically: It must be requested by the borrower, who will be required to provide adequate documentation to support the request (which includes base pay and tips/commission for applicable employees).

Apply for General Assistance With an Economic Injury Disaster Loan

For assistance with broader business needs (eg, paying off debts, funding inventory, etc.), restaurants and retail establishments can apply for an Economic Injury Disaster Loan (EIDL) directly through the SBA. Small businesses qualify for up to $2 million in EIDL funding, including an emergency advance of up to $10,000 to cover temporary loss of revenue. Participating businesses are eligible for a long-term repayment plan (up to 30 years) at 3.75% interest.

If you have an existing SBA loan and are in good standing, you can work with your lender on receiving a deferred payment plan. But your payments will not stop automatically, so you will have to disable your automatic draft. Interest will continue to accrue on deferred payments.

You cannot duplicate benefits and receive both an EIDL and a PPP loan. However, if you received an EIDL between Jan. 31, 2020, and April 3, 2020, you are eligible for the PPP, as long as funds from the EIDL are not put towards payroll costs (and if they already were, then you can use the PPP to refinance your EIDL). Read the full guidance here. When deciding which loan is right for your restaurant or retail business, consider your specific needs. The PPP is restricted to payroll and other very specific expenses while the EIDL provides more general use and includes a longer repayment term. 

Check out the full webinar below.

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