COVID-19 Relief Bill: Here’s What It Means For Franchises

Congress looks set to deliver a long-awaited $900 billion COVID-19 relief bill by the deadline at midnight on Monday. The bill has wide-ranging implications for Americans and businesses of all kinds, but some especially interesting clauses for the small and medium businesses that make up the franchising industry.

1851 Franchise reviewed the bill to explain what’s coming and what’s important to the franchising world. 

Stimulus Checks Are Back 

The bill, as agreed upon on Sunday night and facing votes in the House and Senate on Monday, includes provisions for another round of stimulus checks. The checks look set to include a maximum of $600 payments to each adult and each child. In April, the U.S. government issued stimulus checks for a maximum of $1,200 per adult and $500 per child. Like the last round of checks, these will start paying less than the maximum when a single taxpayer’s earnings reach $75,000, or when head-of-household income exceeds $112,500, or when income for married couples filing jointly passes $150,000.

PPP Round 2

Of $325 billion slated for small business relief, $280 billion will go to a second round of Paycheck Protection Program (PPP) loans. This original round of PPP was funded with $380 billion, which quickly ran out. Importantly, this bill would allow business owners to deduct expenses associated with the loans, overturning an earlier Treasury Department decision that set businesses up for an unwelcome hit come April 15. 

Similarly, the U.S. will provide another $300 on top of existing unemployment uninsurance for the more than 10 million Americans still looking for work.

Industry Carve-Outs

The legislation, as it stands, has earmarked money for certain industries. 

The bill proposes $15 billion in grants for theaters and small performance venues, $15 billion for airlines to support payroll, $82 billion for schools and $10 billion for child care. 

Notably, there is no special money set aside for the restaurant industry despite 110,000 restaurants closing since the start of the pandemic.

What Franchises Need To Know

While Senate Majority Leader Mitch McConnell promised more help was on the way, this bill came after months of gridlock in Washington. It’s unclear when and what form additional aide for businesses could take as the new administration prepares to take over. 

For now, the floodgates look set to open again on PPP funding. Franchisees should demand franchisors take swift action to secure PPP loans, which can help franchisees pay employees and slash overhead. The portion of PPP loans used to pay employees can be completely forgiven. 

Stimulus checks may briefly increase the spending power of American consumers. Americans on unemployment will have more to spend, but after nine months of catastrophic job losses and economic turmoil, it’s unclear how much of that income consumers will see as “disposable.”