Brewers Association Lists Ways the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) Affects Craft Breweries

image courtesy of Brewers Association
image courtesy of Brewers Association

On Friday, March 27th, the House and Senate passed and then President Trump signed into law the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). This $2.2 Trillion ($2,200,000,000,000) aid package is designed to address the unprecedented public health and economic crisis related to COVID-19.

Attempting to read through this CARES Act can be a challenge to say the least. Over the weekend, the Brewers Association (BA) offered up highlights of the bill and how small, independent brewers can access financial relief to assist in keeping its brewery afloat during these uncertain times.

The following provisions in the CARES Act can help your brewery, brewpub, or taproom weather this crisis. This legislation:

  • Requires the Small Business Administration (SBA) to pay the principal, interest, and any associated fees that are owed on the covered loans for a six-month period starting on the next payment due date. The BA is reviewing the requirements for this provision and will provide more information. 
  • Authorizes businesses with fewer than 500 employees to obtain SBA 7(a) loans with the ability to get a portion of the loan used for payroll, salary mortgage or rent, utility payments forgiven. The eligibility requirements for these SBA loans are relaxed with the intention of getting them turned around quickly and into small businesses’ hands.  There are stipulations around this loan. Additional information about this portion of the legislation can be found here
  • Provides emergency grants of up to $10,000 to provide immediate relief for small businesses who have applied or are applying for Economic Injury Disaster Loans. These grants will be provided by the SBA and have strict requirements. Any money a business receives for the emergency grant will have an impact on additional loans they may have with the agency.

Other provisions in this bill will impact breweries over the next few months, from unemployment insurance to the delay of payroll taxes. This legislation:

  • Includes a retention tax credit to encourage employers to keep workers on payroll during the crisis.Businesses would receive a tax credit for keeping idled workers on their payroll during the coronavirus pandemic. The credit is available to employers whose operations are fully or partially suspended due to a COVID-19-related shutdown order, or employers whose gross receipts declined by more than 50 percent when compared to the same quarter in the prior year. This credit is limited to employment taxes and has additional stipulations.
  • Enables businesses to write off immediately costs associated with improving facilities instead of having to depreciate those improvements over the 39-year life of the building.
  • Temporarily increases the amount of interest expense businesses are allowed to deduct on their tax returns, by increasing the 30 percent limitation to 50 percent of taxable income (with adjustments) for 2019 and 2020.
  • Provides unemployment benefits to people who are self-employed, independent contractors, have limited work history, and others who are unable to work as a direct result of the coronavirus public health emergency.
  • Delays payment of employer payroll taxes allowing employers and self-employed individuals to defer payment of the employer share of the social security tax they otherwise are responsible for paying to the federal government with respect to their employees. The provision requires that the deferred employment tax be paid over the following two years, with half of the amount required to be paid by December 31, 2021 and the other half by December 31, 2022.
  • Provides a temporary exception from excise tax for alcohol used to produce hand sanitizer. For any breweries/distilleries that have transitioned to hand sanitizer production, the provision waives the federal excise tax on any distilled spirits used for or contained in hand sanitizer that is produced and distributed in a manner consistent with guidance issued by the Food and Drug Administration and is effective for calendar year 2020. The TTB also has recently issued guidance about hand sanitizer, which you can view here.

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More information about the items referenced above and additional provisions can be found in the summary here. Please check this page frequently for updates.

The Brewers Association has set up an online Small Business Loan resource center that includes important information on how to access these loans and links to external resources. Additionally, the Brewers Association will be hosting multiple webinars about the legislation and its impact on brewers.

On Tuesday, March 31st, the BA will host Power Hour – SBA Assistance for Brewers During the COVID-19 Crisis at 11:00am Pacific. This hour long online seminar will be hosted by James W. Kim. He’s a partner with McDermott Will & Emery, a firm that represents clients in a wide variety of matters related to government contracting, with a particular focus on cases involving the healthcare industry. Registration is now open and can be completed by clicking here.

The Brewers Association will continue to actively advocate for additional relief specific to breweries in future bills.

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