After providing a financial lifeline to more than 450,000 restaurants and hotels, the Paycheck Protection Program (PPP) stopped accepting applications as planned on Monday, leaving the industry without a source of direct federal aid for the first time since the pandemic began.
The other major source of pandemic emergency assistance, the $28.6 billion Restaurant Revitalization Fund, ceased accepting new applications last Monday at 8 p.m.
During its run, the PPP channeled more than $84 billion in low-interest loans to restaurants and inns, or more than 10% of the $800 billion that was allocated across all businesses, according to its parent agency, the U.S. Small Business Administration (SBA). Restaurants could borrow up to $10 million for a first loan and $2 million for a second draw.
Borrowers could have their loans forgiven—or essentially converted into grants—if they spent the money on specified expenses, including payroll. Otherwise, the five-year loans carried an interest rate of 1%.
The PPP was created in the scramble that followed the initial surge in COVID-19 infections last March. State after state ordered restaurants to shut their dining rooms, and consumers were directed to stay home to avoid the sort of everyday contacts that could spread coronavirus.
While sales fell to negligible levels, if not all the way to zero, operators faced such usual costs as rent and payroll. Millions of employees were laid off, and operators tried to recast themselves as delivery and takeout options. Still, about 90,000 restaurants shut their doors for good because they couldn’t meet expenses, according to the latest count from the National Restaurant Association.
“I’ve heard story after story from small business owners across the country about how PPP funds helped them keep the lights on, pay their employees -- and gave them hope,” SBA Administrator Isabel Guzman said in a statement confirming that the agency has stopped accepting PPP applications.
The agency described the program as "historic."
The PPP initially ran until August 8, 2020, when it ran out of money. Congress re-upped the fund in December, allowing it to resume lending on Jan. 21, 2021. As part of the re-allocation, lawmakers specified that the program would continue in its second go-round until May 31.
Although applications for loans are no longer being accepted, some submitted requests for funds are still being processed, as are applications for loan forgiveness.
Guzman noted that 8.5 million small businesses and nonprofit organizations had been awarded a loan from the PPP.
The PPP came to a close as industry lobbyists try to secure additional funds for the Restaurant Revitalization Fund, an initiative that allows restaurant operators of 20 or fewer units to borrow up to $5 million for a location or $10 million in total. That program was shut down in a matter of weeks because the SBA received applications for about $76 billion, or more than what was in the aid pool.