UPDATE: July 6, 2020: President Donald Trump signed an application extension of the Paycheck Protection Program into law on July 4, pushing the deadline to Aug. 8.
- The U.S. House passed an extension of the Paycheck Protection Program less than a day after the initial deadline for forgivable loans closed on June 30. The legislation has already been approved by the Senate and extends the deadline to apply for funding to Aug. 8. The measure now awaits President Donald Trump's signature.
- The Trump administration has not allocated $130 billion in loan funds intended for recipients of the $660 billion program.
- Congress plans to consider another novel coronavirus relief plan this month, which could include additional small business aid.
The PPP extension comes as restaurants in select markets are forced to re-close their dining rooms or reduce capacity to comply with new state guidelines. On Wednesday, California Gov. Gavin Newsom ordered 19 counties to close their dining rooms for the next three weeks as COVID-19 cases swell ahead of the July 4 holiday weekend — just weeks after he allowed restaurants to begin seating customers indoors again.
This operational flip-flop could be crushing for restaurants that have been limping along with skeleton crews amid the coronavirus crisis, especially if it takes them out of compliance with PPP guidelines if they are forced to furlough or layoff staff as a result of new dining room restrictions. Sixty percent of the loan must go toward payroll in order to be forgiven.
“The quick action by the Senate and House to extend the PPP means that the restaurants and small businesses who need it most will have additional time to utilize the program. We appreciate Sens. McConnell and Schumer's leadership to ensure a vote could happen before the recess. We hope that the bipartisan work can continue on additional legislation that will allow those small businesses most harmed by the pandemic to secure a second PPP loan," Sean Kennedy, National Restaurant Association EVP of Public Affairs, said in a statement emailed to Restaurant Dive.
The Independent Restaurant Coalition underscored the importance of restaurant-specific aid beyond PPP for the industry in this dynamic environment.
"[Wednesday's] extension of the Paycheck Protection Program is an important short-term tool for all small businesses, but there's no telling how long this crisis will last or how many more cities and states will be forced to close their businesses again," IRC said in a statement emailed to Restaurant Dive. "Independent restaurants require more from Congress, and Rep. Blumenauer and Senator Wicker's bipartisan RESTAURANTS Act would give these businesses the confidence and resources to help get through this."
The Restaurants Act is a $120 billion relief package designed specifically for independent restaurants, and is supported by both IRC and the National Restaurant Association, both of which have called for additional financial safety nets for the restaurant industry since March. Economic consulting firm Compass Lexecon predicts that 85% of independent restaurants could close by the end of 2020 if Congress doesn’t provide direct relief for this market.
PPP has been amended several times since its first iteration, including recent changes to streamline forgiveness applications and the Paycheck Protection Program Flexibility Act in early June. As COVID-19 cases continue to spread across the country, keeping the nation's economy in limbo and the restaurant industry on the brink of disaster, there will likely be further extensions and changes to the program as restaurants struggle to stay afloat, but direct relief may be increasingly necessary.