New Legislation Extends Aid For Small Businesses Including Breweries
After months of political wrangling and a stressful weekend for many small businesses, President Trump finally signed a $900 billion aid package passed by both houses of congress last Monday. The bill extends many of the measures initiated in the Coronavirus Aid, Relief, and Economic Security (CARES) Act last spring. This new legislation funds programs to help individuals and small businesses, including breweries. With many areas facing new government-mandated business restrictions due to rising numbers of COVID-19 cases, the aid comes at a critical time.
Since April, many breweries have invested heavily to maintain safety and economic viability. Changes include website upgrades for takeout orders, expanded indoor and outdoor spaces and delivery options. In addition to these costly changes, breweries have seen uneven customer traffic and revenue. Breweries hope that this new stimulus package will allow them stay afloat long enough for restrictions to ease and economic activity to pick up.
More Funds For Small Breweries and Employees
The bill contains a broad range of stimulus for both individuals and targeted sectors. Provisions of most interest to the brewing industry include:
- $280 billion for the Paycheck Protection Program (PPP)
- Extended unemployment benefits for furloughed employees
- Authorization for the Federal Reserve to support small-business lending programs
- $20 billion in grants for companies in low-income areas
- $12 billion of PPP funding specifically allocated to minority-owned businesses
Comparison to Springtime CARES Act
With regard to small businesses, this stimulus this bill is significantly smaller than earlier packages. The initial CARES Act, which took effect April 3, 2020, provided over $2 trillion to assist individuals, state and local governments, and businesses with the economic fallout of COVID-19. Of that amount, $376 billion was targeted for small businesses, including breweries.
Due to high demand, all funds were depleted within just 13 days. Congress passed a second round of stimulus in late April. The $484 billion package allocated additional funding to the existing programs. However at this point most of those programs have already closed or were scheduled to end no later than December 31.
Programs Helpful, But Complicated
As with earlier programs, there are still some unknowns and lots of fine print. Many of the main sources of assistance have complex hurdles to clear.
Paycheck Protection Program (PPP)
The largest largest pool of funds, the PPP, was also the most popular and most critical to craft breweries and their employees. Said Dean Wasson of Wild Blue Yonder Brewing in Castle Rock, Colo., “The PPP loan was a life saver for us. It allowed us to keep the doors open despite losing money on an almost daily basis. We were able to keep our core staff working so that we were ready to re-open without skipping a beat.”
This new round of funding allows business that previously missed out to apply for first-time loans. Some breweries that already received loans may also be eligible for a second helping. They will need to meet strict criteria such as showing a drop greater than 25% in their 2020 revenue vs. 2019.
Businesses apply for PPP loans through a participating bank, and for most breweries their current business bank will be the quickest option. Loans are forgivable if a business spends the money on eligible expenses such as payroll, utilities, rent or mortgage. The latest legislation expanded that to include supplies and the purchase of PPE for employees.
The bill contains another new provision, which allows businesses to deduct their PPP funds as a business expense. By documenting those expenses breweries can enjoy a break on their 2020 tax bill.
Economic Injury Disaster Loans (EIDL)
EIDL loans offer favorable lending terms to small business but unlike PPP loans they must be repaid. This was one of the few programs not scheduled to terminate, so it is essentially unaffected by the new stimulus bill.
In contrast, the grant program was already fully subscribed and closed. As a result, the $20 billion of targeted grants will be a new source of funds. Individual grants max out at $10,000 but do not require repayment. Breweries must apply directly with the SBA for both loans and grants.
In April the Federal Reserve rolled out the Main Street Lending Program to encourage banks to lend money to small and medium-sized business. This program terminates December 31. Although the current stimulus bill authorized the Federal Reserve to initiate similar programs, the Fed currently has no plans to utilize that additional authority.
Customer Support Critical For Breweries
It’s unclear whether any additional stimulus will come with the new administration, or what the regulations in each locality will look like in the coming months. One certainty remains — ongoing customer support is critical to craft breweries’ survival. Government subsidies are no replacement for customers.
Beer-lovers can support their local breweries by purchasing takeout beer, getting it delivered (where possible) or enjoying a socially distant outdoor pint (weather permitting). With support from loyal customers and the government, hopefully our favorite craft breweries will weather this pandemic.