Restaurant owners can use money from the new stimulus package to pay their employees the equivalent of the cash tips they're missing out on. Here's how it works.

The new $2.2 trillion stimulus package signed into law by President Trump last week will provide more than $300 billion in loans to small businesses.
The loans are meant to help struggling businesses pay their employees during the economic crisis caused by the coronavirus pandemic.
The money can go toward payroll, including the equivalent of cash tips.
Many of the country's 15.6 million restaurant workers , who make an average of $12.49 per hour , rely on cash tips to make ends meet.
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The new $2.2 trillion stimulus package signed into law by President Trump last week offers small businesses a lifeline in the form of more than $300 billion in zero-interest loans , some of which can be forgiven.

The loans, meant for businesses with fewer than 500 employees, could be particularly impactful for the restaurant industry, which employs 15.6 million Americans. Seventy percent of the country's one million restaurants are single-unit , and 90% have fewer than 50 employees, according to the National Restaurant Association. Thousands of establishments have been forced to close down and lay off many of their employees. The association estimates the industry will take a $225 billion hit because of the pandemic , and that between five and seven million restaurant workers could lose their jobs by June.

The stimulus package creates the Paycheck Protection Program, which provides eligible small businesses with government-backed loans that can be forgiven if businesses fulfill all requirements. The loans, which are meant to incentivize businesses to keep employees on payroll, can be used for expenses including payroll, mortgage and rent payments, and utilities.

Crucially for the restaurant industry, the money can be used to pay for any kind of employee compensation including the equivalent of cash tips.

Cash tips make up a huge chunk of restaurant workers income

Many restaurant workers rely on cash tips to make ends meet. The average hourly wage for restaurant workers is $12.49 , or less than $26,000 per year, according to the Bureau of Labor Statistics. In New York City, the minimum wage is $15, which can be broken down to a $10 cash wage plus a $5 tip credit for food service workers.

Alex Lynch, a captain at the NoMad in Manhattan who was furloughed earlier this month when the restaurant closed , recently told Business Insider that her tips could more than triple her hourly takehome pay.

Paul Einbund, owner of the upscale New American restaurant The Morris in San Francisco, said the provision specifically mentioning cash tips is the most important part of the stimulus bill.

"I don't think I'm going out on a limb by saying the vast majority of small restaurant owners are worried more about their staff and regulars then business right now," Einbund told Business Insider.

Einbund, who's had to lay off nearly all of his 20 employees but has kept his restaurant open for curbside pickup, said it's crucial that restaurants get these funds as quickly as possible.

"Survival for most of us isn't about knowing the funds might be coming, it's about getting the funds so we can start dispersing them," he said, adding that it's "crushing" not being able to pay staff and vendors.

Treasury Secretary Steven Mnuchin said in an interview with Fox Business Network on Monday that he expected the loans to be available starting Friday.

Employers who have already laid off workers can still apply if they rehire their employees

Restaurant owners like Einbund, who've already had to lay off the majority of their employees,can still be eligible for the full loan amount as long as they rehire all their full-time employees by the end of June.

But as Eater's Ryan Sutton reported, that may not be feasible for restaurants that are already barely keeping their heads above water.

Another form of assistance restaurant owners can apply for is the payroll tax-relief program. The program allows employers who continue to employ workers through the coronavirus crisis to defer their payroll taxes so they can keep paying those employees, as Business Insider's Jennifer Ortakales and Bartie Scott recently reported.

Employers can apply for either the small-business loan or the payroll tax-relief program but not both.

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