SRAs: COVID Relief Update - 12.14.20

Throughout the weekend, Senators and House members continued to negotiate on an omnibus measure, which could serve as a vehicle to attach COVID relief.  Simultaneously, the moderate Senate and House working group refined their legislative framework, with a goal of releasing language today.  Notably, the group decided to sever their framework in two.  The first would contain items that both sides largely agree upon, like funding for schools, health care and an additional round of PPP for those with significant COVID related revenue losses.  The second would contain the outstanding hot spot issues that continue to divide Republicans and Democrats – namely, liability protections and state and local funding levels and parameters.   

While Senate and House Leadership are negotiating a package separate from the moderate working group, the working group’s decision to sever the framework, an approach originally suggested by Leader McConnell, could help galvanize Congress to pass what they can now, and leave the remaining fight for another day.  On Sunday, House Majority Leader Steny Hoyer (D-MD-5^th District) suggested that Democrats may be willing to accept this severed approach. If his statements represent the Democratic party more broadly, it would be a significant development toward the potential for a COVID relief agreement being reached.

Attached are the latest proposals released tonight.  We are still analyzing the legislative language, particularly the liability pieces.  On the PPP front, restaurants that meet a calendar quarter revenue loss threshold (30%), when comparing a quarter of 2019 to 2020, may be eligible.  Critically, it would restore the tax deductible expenses for PPP recipients. Additional restaurant priorities include adding supplier, PPPE and other costs to the allowable forgivable expenses of PPP loans; an easing of the forgiveness process for certain loans; the allowance of certain 501(c) (6) entities that provide assistance to restaurants to participate; the explicit inclusion of a per location carve out for restaurants; etc.  This is a strong step in the right direction, but we remain vigilant on key aspects we proposed in our December 7 letter (attached).  One of the hurdles to try to overcome is the inclusion of the deductibility aspect, as Secretary Mnuchin is threatening a Presidential veto, if the provision remains.

We will continue to work with all parties – particularly the Administration, the moderate working group and Republican and Democratic Leaders in the House and Senate – as things progress and will provide additional updates in the process.