You now have more time to apply for PPP forgivable loans

The Paycheck Protection Program is a loan backed by the U.S. Small Business Administration intended to provide small businesses with the funds necessary to avoid laying off employees amid the coronavirus pandemic. The loans, some of which are forgivable, were created as part of the CARES Act that Congress approved in March 2020. The program was scheduled to sunset on March 31, 2021, but the PPP Extension Act of 2021 signed by the President extends the application period to May 31, 2021.

Who is eligible?

Small businesses with 300 or fewer employees, independent contractors and self-employed persons are eligible for the loans. Eligible businesses have a NAICS code that begins with 72, which includes many businesses in the hospitality industry. Businesses with multiple physical locations that employ fewer than 300 people per location are also eligible. The loans have an interest rate of 1% and are forgivable if the employee retention criteria are met and if the funds are used for eligible expenses.

While the application extension doesn’t change any of the eligibility requirements for the loans, there were significant changes made to the program already this year. After the federal relief package passed in late December added $284 billion in funding for a second round of PPP loans, President Joe Biden announced additional changes to the program in February to open the loans to more underserved small businesses. These recent changes to priority, together with additional funding, mean that many businesses that have already applied may be able to secure a second-draw loan. The U.S. Small Business Administration has more on those requirements here.

What does this extension really mean?

One notable change that the PPP Extension Act makes beyond extending the deadline is that it gives the administration an additional 30 days beyond May 31 to process loans and loan applications that have already been submitted. This may come as a relief if your business is one of the roughly 190,000 small businesses with pending applications that would have been prevented from securing a loan when the program sunset on Wednesday.

What this means for the hospitality industry

The hospitality industry was hit particularly hard by the pandemic, and these loans are crafted with that in mind. Some businesses might be reopening now that were completely shut down and unable to meet the employment requirements in 2020. This extension provides small business owners a chance to re-evaluate their situation and the benefits available to them.

How to apply

If you are interested in a loan, the first step is to contact a lender. If you have already applied, getting in touch with the same lender streamlines the process. The U.S. Small Business Administration offers a lender match program that can match you with a lender within two days or find eligible lenders in your area. If you have additional questions, you can reach out to your Washington Hospitality Association Territory Manager.