Hospitality industry secures $ 18 billion in latest round of PPP loans
- The hospitality industry, which includes restaurants, has received more than $ 18 billion in loans under the latest round of the paycheck protection program that began in January, according to U.S. Small Business Administration data as of February 7. This equates to about 18% of the program’s nearly 101 billion loans, the most received by any industry, so far in 2021.
- SBA data shows that about 70% of loans are for less than $ 50,000. Restaurant activity reports that small businesses that borrowed money in the first round now withdraw three times that amount in the second round.
- The distribution of these loans comes as Congress debates a $ 1.9 trillion budget resolution motion including $ 25 billion specifically dedicated to restaurant subsidies, and $ 7.25 billion more for the PPP.
The second round of PPP loans appears to be much more favorable to the hospitality industry. During the first round of the program, which ran from April to August, only 8% of the sector have received loans, according to August data from the SBA.
But the National Restaurant Association and the Independent Restaurant Coalition still argue that this program is not enough to help the battered restaurant industry recover.
“The paycheck protection program adopted last year provided about $ 34 billion in support for the restaurant industry, but the pandemic has cost U.S. restaurants and bars more than $ 240 billion in sales since. March, “the associations said in a joint letter to Congress on February 24. ten.
The associations urged Congress to adopt the $ 25 billion restaurant subsidy program this is part of the budget reconciliation, which could distribute grants of up to $ 10 million per restaurant (or $ 5 million per physical location) and allocate $ 5 billion in grants to restaurants that generated less than $ 500,000 in revenue. in 2019. The NRA and IRC said the proposed program is “a good first step” in helping restaurants maintain payrolls and repay debts – the latter not as viable with a PPP loan because the program requires the bulk of the loan to go to workers’ wages.
If the much larger portion of the PPP loans received by the hospitality industry this time around are tied to the Maison’s restaurant grant fund, it could be an adrenaline rush for the struggling segment. That said, the $ 25 billion package is still in the works and could very well change before it reaches the Senate. Notably, however, President Biden has has repeatedly indicated that he supports the grants specifically for the restaurant industry.