The McLean, Virginia, USA-headquartered International Foodservice Distributors Association (IFDA) has appealed to Congressional leaders in Washington about the critical need for economic intervention as foodservice distributors, deemed essential to the nation’s infrastructure, continue to suffer dire financial consequences as a result of the Covid-19 crisis.
“While the CARES (Coronavirus Aid, Relief and Economic Security) Act was an important start for our country and economy, many segments of the economy were not given the economic relief needed to sustain their businesses,” IFDA President and CEO Mark Allen said. “Congress will need to take subsequent action to ensure that foodservice distributors and their customers, like restaurants, have the liquidity necessary to get past the closure period and get back on track.”
Since shelter in place orders across the USA were implemented in mid-March, distributors and their customers throughout the foodservice supply chain have struggled. The closure of campus eateries and school cafeterias as well as other hospitality customers has decreased the overall demand for “food away from home” by 90 percent. The foodservice distribution industry projects it will lose up to $24 billion through mid-June.
“Foodservice distributors will play a vital role in reopening the national economy. Restaurants and other customers will rely on the credit distributors provide to purchase the products they need to restart their businesses,” said Allen. “Congress must act to ensure distributors and their customers have the liquidity needed to get through the closure period and reopen for business.”
In a letter to Congress, he specified the challenges distributors have faced since the quarantine started and urged Washington to quickly to assist in the following ways:
Tax credits for perishable product that could not be sold due to quarantine
Provide distributors with the funding necessary to offset the cost of uncollectable customer debt obligations due to government-mandated closures.
Enhancements to the CARES Act
- Allow Paycheck Protection Program (PPP) funds to be used to pay suppliers
- Change forgiveness rules to reduce required payroll spending to 50% of loan amount and expand the forgivable uses of funding
- Provide additional funding to the PPP, expand the loan limit to 4x monthly expenses, allow companies to take up to three PPP loans and extend the program through the end of the year
- Extend the forgiveness rehire timeframe to 90 days after full reopening of the restaurant industry, and permit companies receiving PPP loans to defer payroll taxes owed this year to the next two years
- Expanding affiliation rules to companies in NAICS code 4244
- Increase the employee retention tax credit
- Provide partial loan forgiveness to companies using the Main Street Lending Facility
- Require expeditious release of a credit facility for companies with more than 10,000 employees.
IFDA also urges Congress to take the following actions in addition to the CARES Act provisions:
- Create a Critical Infrastructure Heroes tax credit for food workers
- Expand SNAP benefits to allow for the purchase of hot foods at grocery/convenience stores
“Foodservice distribution is an industry that has survived wars, recessions and countless other challenges,” Allen said. “However, the Covid-19 pandemic has created challenges unlike those seen before now. The legislative changes outlined will ensure foodservice distributors have the resources they need to continue to provide good paying jobs for their employees and to help their foodservice customers get back on their feet when the economy opens again.”
Support for NRA’s Blueprint for Recovery
Meanwhile, the IFDA has also issued a statement in support of the National Restaurant Association’s (NRA) Blueprint for Recovery submitted to Congressional leaders on April 20.
“The restaurant industry has already suffered more than $30 billion in revenue losses and more than eight million employees have been laid off or furloughed,” Allen said. “The impact of this economic crisis is felt throughout the food supply chain and the Blueprint for Recovery is a strategic solution to help rebuild the hard-hit foodservice industry. Congress should authorize and appropriate the proposed emergency $240 billion Restaurant and Foodservice Industry Recovery Fund (RFIRF) as an urgent priority to avoid further damage to this portion of our economy.”