Craft breweries and cideries find relief in the CARES Act

By Beth Newhart contact

- Last updated on GMT

The CARES Act encourages employers to keep workers on payroll with a retention tax credit for the duration of the coronavirus pandemic. Pic: Getty/Azret Ayubov
The CARES Act encourages employers to keep workers on payroll with a retention tax credit for the duration of the coronavirus pandemic. Pic: Getty/Azret Ayubov

Related tags: Beer, Cider, cider makers, Brewers association, Craft beer, coronavirus, COVID-19

Last week the US passed a $2.2 trillion stimulus package for economic relief from the coronavirus pandemic. Assistance to small businesses will help craft alcohol producers keep going.

US Congress scrambled to pass an economic aid package as cases and deaths from COVID-19 have soared in the last four weeks. The US now has the most confirmed cases in the world at more than 140,000.

The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) is more than 800 pages long and is the largest stimulus to be passed in US modern history at $2.2 trillion. Nearly $400bn is allocated to help small business owners.

Loans, grants and tax credits

This is big news for craft alcohol producers, who called upon the government this month for financial assistance​. Mandated closures of bars, restaurants, breweries, wineries and taprooms have slashed income and forced layoffs.

Provisions in the CARES Act can help small businesses a few different ways. The legislation requires the Small Business Administration (SBA) to pay the principal, interest, and any associated fees that are owed on covered loans for a six-month period.

Companies with less than 500 employees can obtain SBA 7(a) loans and use a portion of the loan for payroll, salary, mortgage, rent or utilities. This portion and any interest would be forgiven if the companies maintain payroll during coronavirus, incentivizing them to avoid layoffs and prioritize employee wages.

It also encourages employers to keep workers on payroll with a retention tax credit for the duration of the pandemic. This will be available to employers with operations that are fully or partially suspended due to COVID-19 shutdown orders.

Emergency grants of up to $10,000 will be provided to some small businesses who have applied for Economic Injury Disaster Loans. But these grants have strict requirements and receiving one will have an impact on additional, future loans from the SBA.

Under the Act, every adult American making less than $75,000 per year will receive a one-time, $1,200 check from the government, with $2,400 going to married couples and an additional $500 per child. But the timeline of administering these checks is unclear, and may not happen for several weeks or months.

Cider shifts business models

Michelle McGrath, executive director of the American Cider Association (ACA), called CARES “a stimulus package unlike any our country has ever seen. It’s not perfect, but it helps.”

“We’ve been working with regulators and lobbying Congress to get ​[cideries] the relief that ​[they] need. There have been some small victories. I’m optimistic more is on the way.”

The ACA has a dedicated website with coronavirus resources​ for those working in cider, and is sharing industry news with members. Consumer reports show that Americans have been stocking up on cider for their self-isolation time.

Nielsen data found that off-premise cider sales were up 22% for the week ending on March 14 compared to the week ending on March 7.

Relaxed alcohol delivery laws and increased availability are boosting sales for taprooms of smaller cideries, but it’s still been a struggle for many producers. On-premise sales typically account for 60% of cider’s total sales, according to Nielsen.

“It’s safe to say we will see a dramatic shift in on-premise’s dominance in cider’s marketshare in the coming weeks. Expect to see business model ​[adaptations] to continue and include curbside, delivery and online retail,”​ the ACA said.

Beer connects with webinars

The Brewers Association (BA) is in agreement, and said “While this is a significant step forward that provides much needed relief for small and independent breweries who are facing dire economic challenges, there is more work to be done.”

For its members, the BA is hosting frequent free webinars about the legislation and its impact on brewers. This week’s topics include the specifics of CARES, small business loans and forecasting cash flow needs.

The BA has a coronavirus resource center​ as well as a small business loan resource center​, which include webinar info, legislative guidelines and a breakdown on loan types and tips for filing.

The group advises breweries that the SBA does not provide direct loans, but the process starts with local lenders, working within SBA guidelines. Breweries are encouraged to research what loans they may be eligible for, and work with the BA and SBA lenders in the process.

“We hope this piece of federal legislation will be the first of many that will provide relief to the brewing community, and subsequently the economy. The Brewers Association will continue to actively advocate for additional relief specific to breweries in future bills,”​ BA said.

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