The U.S. Small Business Administration has announced that it will reopen the Paycheck Protection (PPP) loan portal to PPP eligible lenders with $1 billion or less in assets for first and second round of applications on Friday, January 15 at 9 a.m. EST. The portal will fully open on Tuesday, January 19, to all participating PPP lenders.
During this new round of funding, the SBA seeks to reach underserved and minority-owned small businesses by opening the process to 5,000 more lenders, including community banks, credit unions, and farm credit institutions. The agency also plans to have dedicated service hours for these smaller lenders after the portal fully reopens next week.
Businesses that received a PPP loan under the first round of assistance (CARES Act) are eligible to apply for a second loan, or second draw, under the renewed PPP. To qualify for the new loan, they must have used or will use the full amount of their first loans. Businesses that did not receive a PPP loan under the CARES Act can apply for the renewed program. Updated PPP Lender forms, guidance, and resources are available at www.sba.gov/ppp and https://home.treasury.gov/policy-issues/cares.
COVID-19 and the economic downturn made 2020 a rough year for everyone, but almost no one has suffered as much as small business owners. In the closing days of 2020, Congress passed another COVID-19 stimulus measure totaling nearly $900 billion. The bill signed by the President includes $284 billion for a second round of the Paycheck Protection Program (PPP) loans and an additional $20 billion for small business grants. The PPP provides forgivable loans to small businesses to help them stay open and their workforces employed. Sixty percent of the PPP loan goes to cover payroll expenses.
The new relief package expands the eligible uses of a PPP loan beyond payroll, rent, covered mortgage interest, and utilities. Now included in the new package are operational expenses for business software or cloud computing services that facilitate business operations, including product or service delivery or the processing, payment, or tracking of payroll expenses.
Lawmakers also settled a long-standing issue in the relief bill. It allows PPP borrowers to claim tax deductions for the expenses they covered with forgiven loan proceeds. However, there is some uncertainty about whether states will allow tax-free PPP forgiveness or PPP borrowers from claiming PPP expense deductions on state tax returns.
Help for Struggling Restaurants
While the major restaurant industry groups feel the new aid package does not go far enough to help struggling restaurants, the hope is that this measure will be a starting point for the new Congress. A few critical areas of the bill were championed by the industry, including the PPP extension, a principal goal of the National Restaurant Association.
For businesses in the accommodation or food service industries such as restaurants, the revised PPP will provide a loan amount up to 3.5 times the average monthly payroll costs registered during the one year prior to the loan or the prior calendar year. Companies in other sectors are limited to loan amounts up to 2.5 times average monthly payroll costs. The maximum loan amount in all cases is $2 million.
The revised PPP also features increased accessibility. Restaurant and lodging businesses with 300 or fewer employees per location can apply for a PPP loan. Under the initial PPP rules, companies with fewer than 500 employees in total could apply for a loan.
The NRA viewed the COVID-19 relief package as a "down payment" on what may be required to ensure the restaurant industry's recovery. The NRA has urged Congress to create a Restaurant Recovery Fund for structured relief to help restaurants get the liquidity they need to adapt, rehire, and eventually reopen. The NRA had also sought to establish a long-term loan program beyond PPP, so restaurants can rehire, retrain, and retain employees by providing up to six months of operating costs and additional support.
For the past fifteen years, Quikstone Capital Solutions has provided working capital to more than 10,000 small businesses nationwide. Our doors have remained open throughout the pandemic, and we have continued to support our merchants and our partners. If you are interested in learning how Quikstone can help your business with easy, fast, and flexible working capital, contact us today.