PPP reopens, expanded for food and lodging businesses

By Michelle Price
UCBJ Managing Editor

WASHINGTON – The Paycheck Protection Program (PPP) will reopen in full on Jan.19 and has been enhanced to better assist those businesses in the accommodations and foods business sector.

There is $284 billion allocated for this round of the PPP, and the program prioritizes minority, underserved, women-owned and veteran businesses. When the last PPP round ended, there was about $150 billion remaining and the Small Business Administration (SBA) wants to ensure that small businesses do not get left out of this round. 

“SBA has worked expeditiously to ensure our policies and systems are re-launched so that this vital small business aid helps communities hardest hit by the pandemic,” SBA Administrator Jovita Carranza said in the announcement. “I strongly encourage America’s entrepreneurs needing financial assistance to apply for a first or second draw PPP loan.”

There are several changes to this round of the PPP. One significant change is that businesses in NAICS Code 72, typically restaurants and hotels, are permitted to have 3.5x multiplier of their average monthly payroll costs to calculate their maximum loan, while others can only have a 2.5x multiplier.

The PPP will be open for a first draw for any business who didn’t apply in the previous PPP rounds. 

Second Draw PPP loans are limited to businesses that (i) employ no more than 300 employees (down from 500) or meet an alternative size standard; (ii) have used the entire amount of their first PPP loan or will use such amounts, and (iii) had gross receipts during Q1, Q2, Q3 or Q4 2020 that were at least 25 percent less than the gross receipts from the same quarter in 2019. 

Uses for PPP loans have been expanded. Human resources, operations and personal protection equipment are now eligible expenses.

Human resources and operations expenditures now eligible include payments for business software or cloud computing service that facilitates business operations, product or service delivery, the processing, payment or tracking of payroll expenses, HR and billing functions, or account or tracking of supplies, inventory, records and expenses.

Covered worker protection expenditures allow businesses to comply with any state, local or federal requirements related to COVID-19. These expenses appear to include PPE, physical barriers that were put in place, expansion of indoor/outdoor space, ventilation or filtration systems and drive-through windows.

PPP borrowers have the option to pick either an eight or 24-week coverage period. This subtle change will allow borrowers more control over how to handle potential reductions in workforce once the PPP funds are exhausted.

Loans are available up to $2 million. For loans up to $150,000, there is now a simplified one-page forgiveness application.

According to Caitlin Schmeer, director of Public Affairs at U.S. Department of the Treasury, the previous round of the PPP saved 51 million jobs. There was more than $522 billion loaned with 87% being loans of $150,000 or less. 

Michelle Price is the managing editor of the Upper Cumberland Business Journal and can be reached via email. Send an email.

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