Trump Hails Virus Cure Progress as Restaurants Seek Added Help
(Bloomberg) -- President Donald Trump assured restaurant owners that therapies and a vaccine for the coronavirus and a tax cut would restore their businesses, after they asked him to broaden a small-business lending program.
The U.S. coronavirus outbreak has heavily damaged the restaurant industry, which saw most dining room business evaporate as customers confined themselves to their homes in fear of infection. Millions of restaurant workers have lost their jobs since March.
Jose Cil, the chief executive of Burger King parent company Restaurant Brands International, told Trump in a meeting at the White House on Monday that the Paycheck Protection Program should be extended so that the loans can be spent over 24 weeks instead of eight. Several other restaurateurs agreed.
Will Guidara, the former co-owner of Eleven Madison Park in New York and a founding member of the Independent Restaurant Coalition that sprang up in response to the virus crisis, told the president that more restaurants would re-open if the loan program is changed to be more beneficial to restaurants and if owners were confident the loans would be forgiven.
“In times like this, a lot of people have their hands out. I don’t take that lightly,” Guidara said. “I do believe that independent restaurants are more vulnerable than most and a really important part of this nation, and I don’t want to lose them.”
The Small Business Administration’s PPP program allows loans of as much as $10 million that must be spent mostly on payroll and can become grants if the proceeds are spent in the eight weeks after a loan is received. Restaurants want that time extended because many aren’t ready to open or be fully functional after eight weeks.
Trump asked Treasury Secretary Steven Mnuchin to look into making the change. Mnuchin said that he’s working on a “technical fix” to extend the period that has bipartisan support, but that he isn’t sure it will be as long as the restaurant owners are seeking.
“Tremendous progress has been made” in therapies and vaccines, Trump said, pointing to an announcement by Moderna Inc. earlier Monday that its experimental vaccine was shown to be safe and to create antibodies in 25 human test subjects.
He also mentioned that he has proposed restoring tax deductions for corporate spending at restaurants, which was eliminated in his 2017 tax overhaul. At the meeting, he asked Mnuchin how that proposal, which would require congressional action, was proceeding.
Mnuchin nodded. “Good,” Trump said.
Restaurants are also asking for more flexibility from a rule requiring that at least 75% of PPP proceeds be spent on payroll because they have greater need to pay rent and other expenses. The National Restaurant Association, a longstanding industry group, had earlier proposed a separate $240 billion grant program to help cover ongoing payroll, operating expenses and reopening expenses.
The White House isn’t yet seriously negotiating a fourth round of coronavirus-related stimulus, the likely vehicle for any change in the tax code. Trump and other White House officials have said they want to wait to see how trillions of dollars of stimulus already authorized affect the economy.
On Friday, The House passed a $3 trillion Democratic economic stimulus bill that Republicans and Trump have already rejected. The measure included many proposed changes to PPP that restaurants and other firms are seeking, including extending the loan forgiveness period to 24 weeks and scrapping the 75% payroll requirement.
Tilman Fertitta, chairman and chief executive of Landry’s Inc., said he wasn’t able to tap PPP because he’s a larger business. He asked whether a separate funding category could be created for larger restaurateurs.
Trump asked Mnuchin whether that can be done. “Well, it’s a complicated issue, Mr. President,” Mnuchin replied, pointing out that the program was meant for smaller firms.
The Independent Restaurant Coalition, which is seeking $120 billion in stabilization funds for small restaurants, said in a statement after the meeting that U.S. restaurants are “looking at months of massive revenue losses” because of government social-distancing mandates, higher costs for personal protective equipment and a decrease in the public’s willingness to dine out.
“A stabilization fund is the only way to ensure restaurants can quickly afford to reopen and re-employ millions of Americans,” the coalition said.
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