In a 92-to-seven vote yesterday, the Senate voted to extend the Paycheck Protection Program, which otherwise would have expired on March 31. Businesses now have until May 31 to apply for a loan. This round of PPP, passed as part of Biden’s $1.9 trillion American Rescue Plan, allocated $7 billion to expand PPP funding, which should make it easier for businesses to pay bills beyond payroll. The extension also gives the Small Business Association until June 30 to process loan applications, which will hopefully allow them to address any application backlog.
The stimulus program got off to a rocky start, with chain restaurants receiving loans, while smaller, independent restaurants struggled to apply. Black, Latinx and Asian business received a smaller portion of funds than their white counterparts, largely because businesses must apply through their banks, and big banks like Chase tended to prioritize chains and other larger restaurants.
There were also rules around what businesses could and could not use the money for, and stipulations on what kind of spending would ultimately result in loan forgiveness. And those rules often didn’t fit the needs of restaurant industry. For instance, the money had to be used within a certain time frame, and there was pressure to use the loans on payroll, even when restaurants were closed and it would’ve been dangerous to have active employees. “It’s a disguised hand-out to restaurant owners that helps the government get their unemployment numbers to look better than they are,” said restaurant owner Naomi Pomeroy on Eater’s Digest last May.
After public pressure, most of the chains who received PPP funds returned them, and the Biden administration revamped the PPP loans in an effort to make them more equitable. This time around, there was a a 14-day priority application window for businesses with fewer than 20 employees, and an adjusted loan formula for solo-proprietors. Restaurants are also now able to use funds to pay vendors and build outdoor dining setups.
The loan extension comes at a time when across the country, most states have allowed indoor dining to return in some capacity, even as COVID case numbers are stagnant or may even be rising. Therefore, restaurants, for better or worse, are more likely to use the loan to hire back employees. According to Forbes, as of March, there is still $103 billion left in unclaimed PPP funds: “By providing small businesses with two more months to apply and giving the SBA an additional month to process applications, we will help ensure critical support isn’t cut off,” House Small Business Committee Chairwoman Nydia M. Velázquez (D-NY) said in a statement.
Correction: March 26, 2:20 p.m.: This post has been updated to accurately reflect the amount allocated for PPP funds.