There’s Still Time to File for Paycheck Protection Program (PPP)

With the August 8 deadline approaching for businesses to file for the Paycheck Protection Program, Modern Restaurant Management (MRM) magazine quizzed Christian Warner, Director of Domestic Policy & Corporate Social Responsibility at Kabbage for what restaurants need to know to apply for funding. 

What can restaurants do now to file for PPP before it’s too late?

Don’t wait, the sooner applications are submitted, the sooner the approval process can start. The application deadline is now August 8, 2020, and my company is accepting applications for all eligible small businesses, including new customers and the self-employed. Make sure you have your required paperwork in order including your business’s tax filings for 2019. We continue to streamline the application process as the median time it takes to apply, be verified and receive SBA approval through Kabbage is four hours.  For more details including the required paperwork and process can be found here.

What are the new rules?

PPP loans are available for up to 2.5 times of your average monthly payroll during 2019. All or part of your loan may be eligible for loan forgiveness and businesses have up to 24 weeks to use the funds appropriately. To be eligible for full forgiveness, at least 60 percent of the funding must be used on payroll and wages, while the remaining 40 percent can be used for lease or rental payments, utility bills or mortgage interest. Any amount that is not forgiven will be converted into a five-year loan with a one-percent fixed interest rate.

Were there any benefits in waiting?

Certainly, there is now less confusion and the SBA is issuing fewer updates to the rules to apply for a PPP loan, but largely a business that applied on day one versus today benefit from the same loan terms. Thankfully, the recent extension does allow businesses that may not have felt hardships at first to now apply for funding if things have changed.  

With restaurants in flux across the country about reopening, how does accepting PPP funding affect that?

If restaurants are feeling any hardship or expect hardships in the near future, we would recommend considering applying for a PPP loan. You will have 24 weeks to use the funds to maximize forgiveness, and for any amount that is not forgiven the PPPrepresents some of the best-priced capital in the market. There have been suggestions in Congress that businesses that took a PPP loan originally will be able to apply for a second loan in the future, too. If you believe you may need additional funding down the road, applying for funds now may offer you that benefit later. 

What are some challenges they should be aware of?

Forgiveness rules are not yet final as lenders across the nation are waiting on final guidance. The general themes of forgiveness are complete but specific details that encapsulate the broad variances and business structures or all small businesses are yet to be issued. That’s OK. All businesses will have up to 10 months to apply for forgiveness after their coverage period is over, and we encourage businesses to wait to apply as there is no rush and they may benefit from updates to forgiveness guidelines that may benefit their business and their loan. 

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