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Restaurant Lobby Urges PPP Changes

Posted on Aug. 4, 2020

The National Restaurant Association wants Congress to make Paycheck Protection Program (PPP) changes that would allow more businesses to take advantage of the forgivable loan program and the deductibility of eligible loan expenses.

In an August 3 letter to Senate and House leaders, the restaurant lobbying group said the current proposal in the Health, Economic Assistance, Liability Protection, and Schools (HEALS) Act to continue the small business loan program would shut out 55 percent of restaurants. A proposal from Sens. Marco Rubio, R-Fla., and Susan M. Collins, R-Maine, would require restaurants seeking a second loan to demonstrate a 50 percent year-over-year drop in quarterly gross receipts.

“While this is appropriate for many businesses, a restaurant’s tight profit margin means that even a small reduction in gross receipts can push them into bankruptcy,” the letter said. That threshold should be lowered to a 20 percent year-over-year reduction in quarterly gross receipts to allow an additional 430,000 restaurants to qualify for another loan, the association said.

The group said its members are on track to lose $240 billion in revenue this year because many restaurants have been forced to close or limit their offerings to takeout. The association also wants Congress to pass legislation to make some PPP-affiliated loans tax deductible. The IRS issued Notice 2020-32, 2020-21 IRB 837, in late April, which prevents PPP loan recipients from deducting some otherwise related expenses.

Both Democrats and Republicans have criticized the notice, saying it goes against Congress’s intent. Senate Republicans said they are pushing to include the Small Business Expense Protection Act (S. 3612), which was left out of the HEALS Act following pressure from the Trump administration.

Despite opposition from Treasury, S. 3612 remains popular in both chambers. A similar proposal was included in the Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act (H.R. 6800).

House Bill Answers Call

On July 31 a bipartisan group of House lawmakers introduced the Paycheck Protection Program Small Business Enhancement Act, which would lower the threshold to 20 percent as suggested by the restaurant association and would make section 501(c)(6) nonprofits and franchised businesses eligible for PPP loans after they were excluded from the program's first round.

The bill, introduced by Reps. John R. Curtis, R-Utah, and Susan Wild, D-Pa., would also give businesses the ability to use PPP loan funds for personal protective equipment and testing expenses. Senate Republicans included a similar provision in their PPP legislation.

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