- The hospitality industry, which includes restaurants, has received more than $18 billion in loans from the latest round of the Paycheck Protection Program that began in January, according to U.S. Small Business Administration data from Feb. 7. This equates to about 18% of the nearly $101 billion loans in the program, the most received by any industry, so far in 2021.
- The SBA's data shows that about 70% of the loans amount to less than $50,000. Restaurant Business reports that small businesses that borrowed money during the first round are now drawing three times that amount in the second round.
- The distribution of these loans comes as Congress debates a $1.9 trillion budget resolution proposal that includes $25 billion earmarked specifically for restaurant grants, and $7.25 billion more for the PPP.
The second round of PPP loans seems to be much kinder to the hospitality industry. During the first round of the program, which ran from April to August, just 8% of the sector received loans, according to August SBA data.
But both 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 passed last year provided about $34 billion in support to the restaurant industry, but the pandemic has cost America's restaurants and bars over $240 billion dollars in sales since March," the associations said in a joint letter to Congress on Feb. 10.
The associations urged Congress to pass the $25 billion restaurant grant program that is part of the budget reconciliation, which could distribute grants as high as $10 million per restaurant (or $5 million per physical location) and would allocate $5 billion in grants for restaurants that earned less than $500,000 in revenue in 2019. The NRA and IRC said the proposed program is "a good first step" to help restaurants maintain payroll and pay down debts — the latter point of which is not as viable with a PPP loan, as the program mandates the bulk of the loan go toward worker salaries.
If the much larger portion of PPP loans received by the hospitality industry this time around is coupled with the House's proposed restaurant grant fund, it could be a jolt of adrenaline for the struggling segment. That said, the $25 billion package remains in draft and could very well change before it reaches the Senate. Notably, however, President Biden has repeatedly indicated that he supports grants specifically for the restaurant industry.