Restaurants consider benefits of Paycheck Protection Program to fund continuity

For restaurants fighting to maintain payroll, pivoting to off-premises only SBA loan program essential

The Paycheck Protection Program, part of the new, Coronavirus Aid, Relief, and Economic Security (CARES) Act signed into law March 27, provides relief to small businesses, including restaurants, that need assistance during the outbreak of COVID-19. The program can boost the prospects of restaurants being able to keep employees and weather the current health crisis and its related social distancing and dining room closures.

Restaurants shift to business derived 100 percent from off-premises dining

Technomic’s Harnessing Technology to drive Off-Premises whitepaper reports that 60 percent of all restaurant occasions had been off-premises before the COVID-19 epidemic, but that includes the drive-thru (e.g. morning coffee pick-up, quick drive-thru lunch). For the industry, a total of 38 percent of U.S. restaurant sales are derived from off-premises sales, factoring in QSR drive-thru-sales, according to RB Online.

According to executives at Technomic, a foodservice consultancy in Chicago, delivery and takeout may range from only 5 percent of 20 percent on average for most independent restaurants. Although consumers are willing to shift to the convenience of off-premises, all restaurants looking to survive over the next 30-60 days are competing in that same space.


Paycheck Protection Program for restaurants

For restaurants, relief is necessary when total sales are dropping 40, 60 percent or 80 percent, not withstanding efforts to bump up pick-up and delivery orders. Some restaurants have closed and may not re-open. Those that continue to operate most likely will need assistance. For restaurants, the Paycheck Protection Program provides forgivable loans covering the eight weeks after the loan is made, provided employee and compensation levels are maintained.

One of the program’s primary purposes is to help keep employees and cover payroll for employees with a salary cap of $100,000. It also helps pay for most mortgage, rent and utilities payments. The Treasury expects that up to 25 percent of loans amounts borrowed to cover these non-payroll costs will be forgiven. The process starts with a loan application. And loan payments can be deferred for up to six months.

The Treasury Department provided some guidance on when that process can begin. Here is that guidance in their own wording:

  • Starting April 3, 2020, small businesses and sole proprietorships can apply for and receive loans to cover their payroll and other certain expenses through existing SBA lenders
  • Starting April 10, 2020, independent contractors and self-employed individuals can apply for and receive loans to cover their payroll and other certain expenses through existing SBA lenders
  • Other regulated lenders will be available to make these loans as soon as they are approved and enrolled in the program

About the Paycheck Protection Program application

You do not need to apply online as this is the may be the safest and most convenient way to go. Any federally-insured (depository) financial institution can handle and process the application. To apply for the SBA loan under the benefits of the new Paycheck Protection Program, restaurants can navigate to To view a list of lenders, click over to

Applications must be submitted by June 30, 2020 online or at a financial institution. To review the U.S. Treasury Department’s guidance, navigate here for its PDF document.

Photo credit: Drew Beamer

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