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How to Apply for a PPP Loan Today (+Value, Eligibility)

Restaurants

How to Apply for a PPP Loan Today (+Value, Eligibility)

April 20, 2020

restaurant-bar-ppp-loan

Although the coronavirus pandemic has plunged the world into recession, the US government is doing its best to help small businesses such as bars, breweries, and restaurants stay afloat. One way the government has done this is through the establishment of PPP loans. 

These loans are to help restaurant and bar owners in the payments of salaries, rent, and operation costs while their dining and drinking areas are closed to the public.

Although the coronavirus lockdown has particularly struck small businesses, restaurants and bars in particular have borne the brunt of the effects of the pandemic.

While some small businesses have found a way to cope and deal with the lockdown of the country, restaurants and bars have found it hard to keep their businesses running. Many others have found it incredibly challenging to meet their financial obligations.

Many small business owners have welcomed the idea of the PPP loans. However very few people know how to apply for these loans. This lack of knowledge threatens to deprive small business owners of the opportunities that this loan package offers. 

Here you’ll learn everything you need to know about PPP loans.

What is a PPP Loan?

The PPP loan is an acronym for Paycheck Protection Program loan. 

The PPP loan program is a stimulus package amounting to almost $350 billion, which will be disbursed through some banks, and the Small Business Administration (SBA). It came into force on March 27, 2020.

The Federal government came up with the PPP Loans program to ameliorate the economic hardships that small businesses are currently facing because of the lockdown that was enforced to curb the spread of the worldwide pandemic.

According to the guidelines of this program, restaurants, bars, law firms, and other professional firms can apply for the PPP loan.

The government is anticipating that there may be a rush for the PPP loans and therefore, will be handling applications on a first-come-first-serve basis.

How Much Is a PPP Loan?

Small businesses that qualify for the loan can get up to 250% of their average monthly salary but not more than $10 million.

The purpose of the loan is to enable restaurant and bar owners to cover about eight weeks of payroll and other running expenses.

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What Types of Restaurants & Bars Are Eligible to Receive a PPP Loan?

For restaurants and bars to be eligible for the PPP loan, they must meet the following conditions:

  • Only restaurants and bars with 500 employees or less are eligible. However, business franchises and hotels that have locations with 500 employees or less can apply, if they meet the standards set by the SBA for small businesses.
  • Individuals who have sole proprietorship business, or work as independent contractors are eligible to apply for the PPP loan provided they were in business before February 15, 2020.
  • Tribal businesses with less than 500 employees and meet the standard of the SBA can also apply.
  • Only small businesses that have been open and in operation on 15 february, 2020 are eligible to apply for the loan.

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​How to Apply for a PPP Loan for Restaurants & Bars

The PPP loan program was officially launched on 3rd April 2020. However, independent contractors and sole proprietorships started applying from 10th April 2020.

To successfully apply for a PPP loan, restaurateurs and bar owners must follow the steps below.

1. Identify a local certified lender near you:

The first step is to find the nearest local certified lender in your area. This is because  PPP loans are handled through SBA certified lenders. Although the loans can be used for any legal expenses, it is mainly for payroll management and other running costs like rent.

2. Apply at your bank

Although you can apply for the PPP loan in any bank, it is advisable to start with your current bank. Since the inception of the PPP loans program, banks have been inundated by applications. The banks are saddled with the responsibility of administering the loans and will be happy to help a customer get the loan.

3. Complete and submit the application form

To be considered for the loan, applicants need to complete the PPP Application Form.

The form will require you to supply the following information:

  • Restaurant or bar name
  • Address of business
  • Contact information such as email, phone number, etc, 
  • Number of employees
  • Average monthly payroll 
  • Your Taxpayer Identification Number.

PPP Loan Forgiveness

Many restaurant and bar owners often inquire if the PPP loans are forgivable.  The simple answer is yes, the PPP loan is forgivable.

This means that it is a soft loan that the whole sum or a portion of it can be forgiven or deferred. However, there are some caveats. Certain have to be fulfilled before this loan can be forgiven.

Restaurant and bar owners must pay special attention to the conditions attached to the PPP loan to be eligible to have the loan or some portion of it forgiven. Failure to meet the requirements will mean that the beneficiaries must repay the loans with interest.

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How to Qualify & Apply for PPP Loan Forgiveness

The primary purpose of the PPP loans to small businesses is for them to manage their payroll, which includes, among others, wages, salaries, as well as for the coverage of medical, vacation, family, and health benefits for employees.

The loans can also be applied to settle mortgage interests, provided that the mortgage was signed before February 15, 2020. The loans can also be used to cover rent and to pay for other utilities provided the rent and utilities were in effect or started before February 15, 2020.

To qualify for loan forgiveness, the businesses must:

  • Maintain the number of employees on their payroll.
  • Not reduce salaries and wages. However, businesses will not be sanctioned for wage and salary decreases between February 15, 2020, and April 26, 2020, provided the reduction is removed by June 30, 2020.
  • Use 75% of the loan for their payroll.

The same process used in applying for the loan is also applicable in asking for forgiveness of the loan.

Those who’ve met the conditions for loan forgiveness can approach their lenders who processed the loans for them. Business owners may send an application through their lenders.

The application for loan forgiveness will require applicants to provide information relating to the number of their employees, payroll reports, and evidence of tax filings. You also need to have documents showing any other expenses required by the PPP loans.

If You Want a PPP Loan, Act Immediately

Applications for the loans will be open from April 3, 2020 and end on June 30, 2020. Those who are interested in this loan should act now because time is of the essence. The PPP loans program is an ad-hoc package designed to help small businesses deal with the shock of the lockdown.

Some experts have predicted that one in five restaurants and bars could permanently close because of the pandemic-induced economic meltdown.  Restaurant and bar owners should take advantage of this lifeline and secure the PPP loan to help their businesses survive the aftermath of the pandemic.

AUTHOR

Nonyerem Ibiam

Nonyerem is a lawyer and legal consultant for small and medium-scale businesses. He also writes well-researched contents, centered around law, technology, business and finance niches. He is the founder of Law Truly and Midstream Buzz.

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