President Joe Biden signed into law Tuesday legislation that will extend the Paycheck Protection Program until May 31.
Previously the program was set to expire at the end of March. PPP, which was part of the CARES Act passed in March 2020, provides loans to small businesses, with forgiveness being contingent on dollars being spent in certain areas like rent and utilities. Businesses can spend the funds over any window between eight and 24 weeks, with at least 60 percent going to maintaining payroll. The interest rate remains 1 percent.
The Biden administration announced new rules in February that gave businesses with fewer than 20 employees a dedicated two-week period to apply. The original eligibility criteria resumed recently, with any business with fewer than 500 employees able to apply for a first-time loan, and any business already with a PPP loan able to apply for a second if it employs fewer than 300 workers.
This year through March 28, PPP has approved 3.6 million loans worth $211.8 billion, which covers about 75 percent of the $284 billion that was allocated to the program when it reopened in January. Dating back to spring 2020 when PPP first started, 8.7 million loans have been approved worth $734 billion. Biden’s $1.9 trillion American Rescue Plan, passed in early March, added $7.25 billion to the program and expanded eligibility to nonprofits.
In 2021 through March 28, Accommodation and Food Services have obtained roughly 302,500 loans worth $35.58 billion, or about 17 percent of the PPP. For most of the pandemic, PPP was the primary source of aid for restaurants, but now the industry has the $28.6 billion Restaurant Revitalization Fund (RRF), which will soon send direct grants to independents and brands that have 20 units or less.
Patrick Kelley, associate administrator for the Small Business Administration’s Office of Capital Access, told a Senate committee on March 24 that the SBA expects to start the distribution process within the next 30 days. The administration is in the process of building an automated technology platform that’s capable of deploying hundreds of thousands of grants.
The good news for chains is that the RRF won’t include the System for Award Management registration process, which required notarized documents that were difficult to gather quickly. The process also lacked multilingual support and experienced a backlog.
“The SBA’s [Small Business Administration] decision levels the playing field and gives the smallest businesses a better shot at getting relief,” Erika Polmar, executive director of the Independent Restaurant Coalition, said in a statement. “The Independent Restaurant Coalition is grateful to the SBA for making this application process easier and looks forward to collaborating with the Administration on the implementation of this program.”