Your Business Credit

Should you get another round of PPP money?

Restaurants and other small businesses have additional protection under the American Rescue Plan


The American Rescue Plan includes additional funding for the Paycheck Protection Program loans. Your business might be eligible, even if you’ve received funds previously.

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President Joe Biden signed the American Rescue Plan on March 11. The $1.9 trillion relief package provided another $7.25 billion for the Paycheck Protection Program (PPP), a forgivable loan program to cover payroll and other business expenses.

For restaurants, bars, caterers and similar establishments, the law also set aside $28.6 billion for the Restaurant Revitalization Fund, which the U.S. Small Business Administration will administer. The grant money being offered under the law can be used for costs including payroll, rent, mortgage payments, utilities, maintenance costs, food and beverage expenses, and paid sick leave.

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For many small business owners, the law’s passage is good news. But it raises a couple of questions: Should you apply for PPP money this time around? And are you eligible?

Small businesses that received a first draw loan under the CARES Act may be eligible for second draw loans. They must have received a first draw PPP loan and used the amount for authorized uses (or have intentions to do so), have no more than 300 employees and be able to demonstrate at least a 25% reduction in gross receipts between comparable quarters in 2019 and 2020.

If you are eligible, you need to act quickly. The American Rescue Plan did not extend the deadline for applying for PPP money beyond March 31, though there has been a push in Washington to extend that deadline. The maximum amount for a second draw loan is 2.5x average monthly payroll costs for 2019 or 2020, up to $1 million. For more information, check out the SBA’s guide to the program, which has been updated as new details of the program become available.

What’s in the Restaurant Revitalization Fund?

If you run a restaurant and did not get PPP funds on the first go-round, you may be better off looking into the Restaurant Revitalization Fund, which provides grants for payroll, mortgage costs, rent, utilities, maintenance, operating expenses, paid sick leave and supplies. Businesses owned by women, socially and economically disadvantaged people and veterans will get priority during the first 21 days.

The grants in this program, which is administered by the SBA, cannot be larger than the eatery’s pandemic-related loss of revenue up to $5 million per physical location or $10 million in total. Very small restaurants are eligible, and the first $5 billion in the program has been reserved for restaurants with less than $500,000 in annual sales.

If a restaurant or bar received PPP funds, the Restaurant Revitalization Fund grant will be reduced by the amount of any PPP loans received.

For more details, check out the National Restaurant Association’s summary. The SBA has not yet posted information on how to apply for the Restaurant Revitalization Fund.

See related: How to get a Paycheck Protection loan in 2021

Bottom line

Many businesses have been under intense financial pressure for the past year. Getting a forgivable PPP loan or, if you run a bar, restaurant or catering service, a Restaurant Revitalization Fund Grant, can be a great way to take some of the financial pressure off yourself, so you can invest in growing your business in 2021.

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