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What restaurateurs need to know about newly proposed changes to PPP rules

Lauren Pope
Content Marketing Manager

Last month, the Paycheck Protection Program (PPP) re-opened for new applicants and certain existing PPP borrowers. The $284 billion in additional loans is open to eligible businesses through March 31, 2021 and also allows some previous PPP borrowers to apply for a Second Draw PPP Loan.

Since reopening funding just one month ago, a report from the U.S Small Business Administration (SBA) shows improvements directly impacting small businesses. According to the SBA’s data, the allocated share of funding: 

  • Going to small businesses with fewer than 10 employees is up nearly 60%
  • For small businesses located in rural areas is up nearly 30%
  • Distributed through Community Development Financial Institutions and Minority Depository Institutions is up more than 40%

On February 22, 2021, announcements were made regarding several reforms that will extend much-needed resources to help small businesses in the recovery. The new plan will make it easier for sole proprietors and small business owners to access PPP loans in addition to allowing some individuals with prior non-fraud felony convictions to access the federal relief program.

How is the new PPP loan different from the last one?

This round of PPP funding includes $284 billion in additional loans for eligible businesses through March 31, 2021. Funding is available for both first-time applicants and returning borrowers that meet the following guidelines and requirements:

  • Are not a publicly traded company and employ no more than 300 people.
  • Have fully used or have allocated the funds from their first PPP loan for authorized purposes only.
  • Can show proof of at least a 25% drop in gross receipts between comparable quarters in 2019 and 2020.

Along with previous changes made to the first round of PPP loans announced earlier this year, the enhancements being proposed for updated funding would expand offerings that directly benefit small business owners. Here’s a look at the key changes to be aware of:

Institute a 14-day period, starting February 24, 2021, during which only businesses with fewer than 20 employees can apply for relief through the Program

Ninety-eight percent of small businesses have fewer than 20 employees and often struggle more than larger businesses to collect the necessary paperwork and secure relief from a lender. The 14-day exclusive application period will allow lenders to focus on serving these smallest businesses first while providing them the support they need.

Help sole proprietors, independent contractors, and self-employed individuals receive more financial support

Many small businesses were structurally excluded from previously PPP or were approved for as little as $1 because of how the loans are calculated. Revisions to the loan calculation formulas will be made to address these problems and ensure small businesses receive more coverage. A $1 billion reserve will also be set aside for businesses in this category with employees located in low- and moderate-income (LMI) areas.

Eliminate exclusionary restriction that prevents small business owners with prior non-fraud felony convictions from obtaining relief through the Paycheck Protection Program

Currently, a business is ineligible for PPP if it is at least 20% owned by an individual who has either: an arrest or conviction for a felony related to financial assistance fraud within the previous five years; or any other felony within the previous year.

To expand access to PPP, reforms included in the PPP Second Chance Act would eliminate the second restriction (the one-year look-back) unless the applicant or owner is incarcerated at the time of the application.

Eliminate an exclusionary restriction that prevents small business owners who are delinquent on their federal student loans from obtaining relief through the Paycheck Protection Program

Currently, the PPP is not available to any business with at least 20% ownership by an individual who is currently delinquent or has defaulted within the last seven years on a federal debt, including a student loan. Working with the Departments of the Treasury and Education, the SBA will remove the student loan delinquency restriction to broaden access to the PPP.

Ensure access for non-citizen small business owners who are lawful U.S. residents by clarifying that they may use Individual Taxpayer Identification Numbers (ITINs) to apply for relief

The PPP statute is clear that all lawful U.S. residents may access the program, but a lack of guidance from the SBA has created inconsistency in access for those with ITINs, such as Green Card holders or those living in the country on a visa. The SBA will address this by issuing clear guidance in the coming days that otherwise eligible applicants cannot be denied access to the PPP because they use ITINs to pay their taxes.

This round of PPP includes increased flexibility in how you can spend your PPP loan – including software fees for restaurant point-of-sale systems and other expenses needed to meet COVID-19 restrictions. Not only can business owners use these funds to pay for any software, cloud computing, and other human resources and accounting needs, but these expenditures will also be fully forgiven provided the business complies with any additional terms of their PPP.

LEARN MORE: Review all of the requirements and rules regarding this latest round of PPP loans and learn how restaurateurs can make the most of their money.

Looking Forward with Oracle

Investing in a cloud-based point-of-sale software solution allows your business to connect with customers safely and securely. From reimagining your revenue growth to rebuilding teams and processes, Oracle has the technology to help you get the job done. If you’re interested in speaking to one of our experts, our team is standing by to answer any questions you may have about the right solution for your restaurant. Reach us by phone: US: +1 866-287-4736; UK: +44 207 5626 827; AU: 1300 366 386; LAD: 52 559 178 3146) chat |

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