After securing financial support for more than 450,000 restaurants and hotels, the Payroll Protection Program (PPP) stopped accepting applications as planned on Monday, leaving the industry without a source of direct federal assistance for the first time since the pandemic began.
Another major source of pandemic relief, the $ 28.6 billion Restaurant Recovery Fund, stopped accepting new applications last Monday at 8:00 pm.
Since its inception, the PPP has channeled more than $ 84 billion in low-interest loans to restaurants and hotels, or more than 10% of the $ 800 billion that has been distributed to all businesses, according to its parent agency, the US Small Business Administration (SBA). ). Restaurants could borrow up to $ 10 million for the first loan and $ 2 million for the second draw.
Borrowers could write off loans, or essentially convert them into grants, if they spent the money on specified expenses, including payroll. Otherwise, the interest rate on five-year loans was 1%.
The PPP was created in the struggle that followed the initial spike in COVID-19 infection last March. State by state have ordered restaurants to close their canteens, and consumers have been ordered to stay at home to avoid the day to day contact that could spread the coronavirus.
While sales fell to negligible, if not completely zero, operators faced common expenses like rent and payroll. Millions of employees were laid off and operators tried to adjust to shipping and pick-up options. Still, about 90,000 restaurants close their doors forever because they couldn’t cover the costs, according to the latest estimates from the National Restaurant Association.
“I’ve heard story after story from small business owners across the country about how PPP funds have helped them keep electricity, pay their employees and give them hope,” SBA administrator Isabelle Guzman said in a statement confirming that the agency has stopped accepting PPP applications. …
The agency described the program as “historic”.
Initially, the PPP lasted until August 8, 2020, when it ran out of money. Congress increased the fund again in December, allowing it to resume lending on January 21, 2021. As part of the reallocation of funds, lawmakers clarified that the program will continue in the second round until May 31.
Although loan applications are no longer accepted, some of the pending fund applications are still being processed, as are loan forgiveness applications.
Guzman noted that 8.5 million small businesses and non-profit organizations received loans from PPPs.
PPPs have come to an end as industry lobbyists are trying to secure additional funds for the Restaurant Revitalization Fund, an initiative that allows operators of restaurants with 20 or fewer units to borrow up to $ 5 million per seat, or $ 10 million in total. This program was closed within weeks because the SBA received applications worth about $ 76 billion, or more than the aid pool had.