A guide to the CARES Act

A guide to the CARES Act

Grubhub is always looking for ways to support our restaurants. In addition to the programs we offer, there are other means of support for restaurants owners, including the most recently introduced CARES Act. The Coronavirus Aid, Relief, and Economic Security Act, also known as the CARES Act, is a law meant to address the economic fallout of the 2020 coronavirus pandemic in the United States.

To help restaurant owners better understand the new programs available to them, we have compiled useful information on the CARES Act.

Background:

  • The $2 trillion Coronavirus Aid, Relief & Economic Security (CARES) Act was signed into law on March 27, 2020
  • The bill includes a $349 billion federally guaranteed lending program for small businesses (“Paycheck Protection Program” or “PPP”)
  • Small businesses and sole proprietors can apply for a loan immediately with participating lenders

Eligibility:

  • Most restaurants with fewer than 500 employees (full and part time) per physical location
  • Funds must be used to retain workers, maintain payroll, and pay mortgage interest, interest on other debt, rent and utilities.

Loan Structure:

  • Key Features
    • Term: 2 years
    • Interest rate: 0.5% fixed
    • 100% funded (no “down payment” or other borrower contribution)
    • No prepayment penalties
    • No personal guarantee or collateral required
    • No borrower or lender fees
  • Further details of the PPP Loan can be found here

Loan Forgiveness:

  • The loan proceeds used in the eight-week period after disbursement (the “covered period”) are generally eligible for forgiveness based on maintenance of existing employee headcount and employee wages.  That forgiveness amount is subject to a reduction based on a formula detailed on the Treasury website.

Preparation / Applying:

  • PPP Application
  • Most recent four quarters of payroll tax form 941
  • Headcount verification / monthly payroll (February 2019 – March 2020)
  • 2019 P&L or 2019 business tax returns
  • Contact your current bank or another financial institution to submit your application

Timing:

  • After abbreviated underwriting and approval process, the loan is typically funded within 1-2 days
  • PPP is available to eligible borrowers through June 30, 2020

Potential Lenders:

  • ForwardLine
  • Contact your current bank as a potential lender

We will be adding more lenders as we identify them.

 

Additional Resources:

 

Note that this site is provided for informational purposes only.  We cannot provide you with legal advice and can’t be held responsible for actions you take on the basis of the information we have provided, so you should analyze the provisions carefully and if necessary consult your own advisor.

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