The U.S. Small Business Administration will begin channeling $284 billion in new Paycheck Protection Program (PPP) funding to restaurants and other small enterprises on Monday, with the lending program tweaked in the second go-round to provide borrowers with more flexibility.
Among the changes of particular interest to restaurants:
- Borrowers can spend the money over an eight to 24-week period of their choosing instead of having the use period start whenever they receive the funds.
- Recipients can use the funds on a broader array of expenses, including normal operating costs, the purchase of personal protective equipment, and any repairs needed to re-open an establishment, without cutting into the portion of their loans that can be forgiven. Under the PPP’s initial structure, potentially forgiven amounts extended solely to very specific expenditures, such as payroll, rent and utilities
- Borrowers can seek a second PPP loan.
The eligibility requirements were also tweaked to address complaints about the first flight of the program. To qualify, applicants need to demonstrate that they’ve suffered at least a 25% year-over-year drop in revenues during any quarter of 2020.
The program is also open solely to businesses employing no more than 300 people, compared with the prior threshold of 500. That new stipulation is intended to keep more of the funds for truly small businesses.
In releasing 124 pages of new guidelines covering the reinstated PPP, the Small Business Administration (SBA) noted that the program is expected to extend loans through March 31.
Lending to first-time PPP borrowers will begin Monday, with the program expanded to previous borrowers starting Wednesday, the agency said. It noted that the funds will be channeled first to what it calls “community financial institutions,” or traditional participants in its small-business loan programs.
"The Paycheck Protection Program has successfully provided 5.2 million loans worth $525 billion to America’s small businesses, supporting more than 51 million jobs,” Secretary of the Treasury Steven Mnuchin said in a statement. “We are committed to implementing this round of PPP quickly to continue supporting American small businesses and their workers.”
Check our website later for an analysis of the new guidelines.