April 24, 2020

Restaurant owners, get ready — an emergency loan program enacted to flatten the curve of unemployment just received a second round of funding after its initial funding pool emptied within two weeks.

However, most of this new funding might already be claimed by business owners whose applications were backlogged during the first round of funding, according to a spokesman with the Consumer Bankers Association. Restaurant owners who want to get in line should start submitting their applications now. (Skip to the end of this blog post if you’ve had trouble applying for these loans.)

The Paycheck Protection Program, administered by the US Small Business Administration, got an infusion of $310 billion today when President Donald Trump signed bipartisan legislation. These loans are coveted by restaurant owners — the industry arguably hit hardest by the Coronavirus pandemic — because they can be used to pay their workers for eight weeks. These loans are forgiven when at least 75 percent of the funds go toward payroll. The rest of the money must be used for rent, mortgage interest, or utilities, according to the SBA.

During the first round of the PPP, restaurant owners struggled to find lenders for these first-come, first-served loans. Despite confusion from the Treasury Department that stalled the program’s rollout, nearly half of the program’s initial $349 budget was claimed within a week. The program’s remaining balance was exhausted one week later.

The food service industry is being slammed by the ongoing crisis. Restaurants could lose up to $225 billion by the end of June, according to the Washington D.C.-based National Restaurant Association. The trade group told federal lawmakers that restaurants could shed as many as 7 million jobs — nearly half of the industry’s workforce. In the two weeks following this dire prediction, a record 10 million Americans filed for unemployment benefits, according to the U.S. Department of Labor.

Scores of restaurants are being forced to make impossible decisions to keep their doors open throughout this crisis. Many have transitioned to delivery and takeout dining on the fly. Hopefully, these stimulus loans can help restaurants carry on with their hard-working staffs intact.

How to Apply

The acceptance of PPP loan applications could begin April 27, and business owners are encouraged to contact their primary lenders immediately about submitting applications. So far, PPP pplications are accepted through:

  • SBA 7(a) lenders
  • Federally insured depository institutions
  • Federally insured credit unions
  • Participating Farm Credit Systems

The SBA advises checking with local lenders to make sure they are participating in the program.

Who Can Apply?

The Paycheck Protection Program is available to any restaurant with 500 or fewer employees. Businesses, nonprofit organizations, veterans organizations, and Tribal business concerns are all eligible to apply.

Others who may be eligible to apply include:

  • Sole proprietors, independent contractors, and self-employed people.
  • Any small business concern that meets SBA’s size standards.
  • Any business with an NAICS Code that begins with 72 that has more than one physical location and with fewer than 500 workers per location.

Check the SBA’s website for a full list of eligibility requirements.

Download a copy of the PPP borrower application form to learn more about what you will need to apply.

Loan Details and Forgiveness

Loans are forgiven when at least 75 percent of funds are used for payroll. Remaining loan balances can be used for interest on mortgages, rent, and utilities. The payroll requirement is based upon maintaining head counts and salary levels; employers must either retain workers or quickly rehire employees. Restaurants that reduce salaries or staffing levels won’t receive full loan forgiveness.

These loans come with no fees from lenders or the government. No collateral or personal guarantees are required. Loans payments can be deferred for six months. Paycheck Protection Program loans have a maturity of 2 years and an interest rate of 1 percent.

Check the SBA’s website for disaster assistance applications and other assistance available to restaurant owners.

Tips to Apply for a PPP Loan

Have you struggled to find PPP lenders, or is your application hung up at the bank? If so, you’re not alone. Many businesses struggled to claim these emergency loans before the program’s first round of funding ran dry.

Here are some helpful tips that could help to get around roadblocks:

Apply at a Community Bank

Community banks seem to be processing PPP loans more quickly than larger banks. That’s according to a webinar by Inc. columnist Ami Kassar, who is also the founder and CEO of MultiFunding, a small-business loan advisor. Business should always check with their existing lenders, but don’t overlook community banks in your area.

Submit Multiple Applications

Lenders scrambled to process the first round of PPP loans in a timely manner, and some were better prepared than others. Borrowers can reduce the risk of being lost in the shuffle by applying for PPC loans through multiple banks.

That said, make certain that lenders won’t submit your loan applications without contacting you first. A fraud alert could be triggered if multiple lenders submit government loan applications on your behalf. Allow one lender to proceed and cancel your applications with the rest.

Try Alternative Lenders

Paypal, Fundera.com, Square, Kabbage, and Intuit Quickbooks are among the alternative lenders approved by the SBA to participate in the PPP. Other alternative lenders may also come on board to offer these emergency loans. However, a spokesperson for the Washington D.C.-based National Small Business Association warns that borrowers must be cautious of scammers.


These are difficult times for the restaurant industry, and the renewal of the Paycheck Protection Program doesn’t change that. Funding remains limited, and whether lawmakers would support additional renewals is anyone’s guess. That said, these loans could restaurant owners buy some time as state and local governments begin to consider reopening local economies.

Restaurant owners who plan on applying for PPP loans had better act quickly. Competition is expected to be fierce. If the program’s second round is anything like its first, then it won’t be long before these funds are exhausted again.