(Bloomberg) -- The $900 billion U.S. stimulus package doesn't allocate direct funding for restaurants and bars, another blow to two of the hardest-hit parts of the U.S. economy.
The wide-ranging spending bill does allow small businesses to take out loans. It also directly funds several beleaguered industries, but doesn't include restaurants and bars. With more states restricting indoor activities, these establishments are already facing a bleak future.
“Independent restaurants and bars will continue to close without additional relief this winter, leaving millions more out of work,” the Independent Restaurant Coalition said in a statement.
Those industries have been decimated by the pandemic that continues to rage across America. Bankruptcies and closures are surging. And while revenue has recovered somewhat from its low in April, sit-down eateries are still struggling. These declines have also hurt suppliers, including beer and spirits providers.
Democrats in the House passed the Restaurants Act earlier this year that would have provided $120 billion in direct funding, but the Republican-controlled Senate declined to take up the legislation. Meanwhile, the stimulus set aside about $15 billion each for the airline and entertainment industries.
Despite the lack of a bailout, the stimulus proved to be “a hard fought victory” that provides the sector an “element of hope” entering the new year, according to Sean Kennedy, executive vice president of public affairs for the National Restaurant Association.
“Is this a long-term solution? No,” Kennedy said. “We're just looking to survive the next three months.”
Restaurants and bars, along with other small businesses, can apply for aid from the Paycheck Protection Program, the vehicle created by the first stimulus earlier this year. The PPP, which received $284 billion in additional funds, lets firms borrow 2.5 times monthly payroll costs, with restaurants and bars allowed to receive 3.5 times.
Another critical part of the aid package, according to Kennedy, is that business expenses, such as rent, that are allowed to be deducted from federal taxes, can be paid with PPP funds. This was not the case in the first round of PPP, he said.
“Our biggest fear is that congress would leave town having done nothing, and they were on that path,” Kennedy said. “It's clear we're going to have severe economic challenges going forward. Our work isn't done.”
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