Jimmy’s Deli, a theoretical client of G&A Partners, is a sandwich restaurant operating in Tucson, Arizona. Jimmy Brown, the owner, has 48 employees—many of which have health benefits. Dine-in revenue represents about 80% of business.
Due to a state ordinance directing all restaurants to close their dining rooms as a precautionary measure in the wake of the novel-coronavirus pandemic, Jimmy knew he’d need to explore several scenarios to determine whether he could keep his business open. He felt like he ultimately had three choices: he could try to ride it out, furlough his employees, or shut down.
Seth Perretta and Malcolm Slee, partners with Groom Law Group, used Jimmy’s Deli as a sample case in a G&A Partners client webinar to illustrate how COVID-19 relief programs, such as the Families First Coronavirus Response Act (FFCRA) and CARES Act, could potentially help a small business owner like the fictional “Jimmy.”
Jimmy has heard about recent federal action providing relief to employers. He thinks his current staff is one of his business’ greatest assets and anticipates the labor market will tighten up again post COVID-19. In this “most optimistic” scenario, Jimmy decides to assist his employees in determining who will benefit most from the emergency leave options under FFCRA, and which loan options he might qualify for under the CARES Act.
He wants to try and keep all of his 38 employees on staff, even though some of them will have no work with the dining room closed. Throughout this scenario, Jimmy must interpret the new laws correctly because it could all affect his loan options or potential tax credit. He knows he cannot use every relief program available because the federal government will not allow businesses to “double dip.”
Watch the video below for more information on how Jimmy moves forward with the relief programs provided by the government while riding out the COVID-19 pandemic.
In the second scenario, Jimmy is increasingly uncertain about how long this crisis will continue affecting his business. He decides to furlough most of his employees and operate using only take-out services. He wants to qualify for the maximum amount of federal relief possible to remain in business, while also doing right by his employees and giving them their jobs back once he’s able to reopen his dining-room doors. Discover how the government coronavirus relief programs affect his decision to furlough all 38 of his hourly employees in the video below
In this, the most pessimistic scenario, Jimmy decides to lay off all 38 of his employees and shut down the restaurant’s operations. Jimmy decides against dissolving the company and instead applies for loans made available through the CARES Act. He knows that by laying off his employees and shuttering his deli he will most likely not qualify for loan forgiveness. Still, he feels it’s the only way he can make ends meet at this moment.
Watch the video below to see how the decision to shut down Jimmy’s Deli affects his ability to qualify for the various government relief programs available through the CARES Act.
PLEASE NOTE: This content has been provided by G&A’s legal partner, Groom Law Firm, and is shared with their permission. This information is only a summary of what is included in the FFCRA and CARES Act and should not be considered legal advice. If you are seeking advice on the COVID-19 business relief programs, please consult with your legal counsel so that you and your counsel may consider all relevant facts particular to your business.
As of press time, the U.S. Small Business Administration was no longer accepting applications for the Paycheck Protection Program or the Economic Injury Disaster Loan (EIDL)-COVID-19 related assistance program (including EIDL Advances).