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To those who have been following our blogs, we’ve spent a significant amount of time addressing two ongoing COVID-19 issues. The first is how struggling bar and restaurant owners can stay ahead of, and work through, the continuing shutdown imposed by Pennsylvania, and the second is breaking down the continuing, and often confusing, regulations and guidance regarding PPP Loans for both our bank clients and our clients who are applying for a PPP loan to keep their head above water. So what about the latest Round 2 PPP loan? Many bar and restaurant owners may be wondering if they are eligible.
On December 27, the SBA issued new interim final guidance, implementing key provisions of the Department of Treasury’s Economic Aid Act. The good news is that there is additional PPP funding available and that this Round 2 funding is more narrowly tailored to small businesses. The bad news is that the program has smaller funding, and does have a few more restrictions as to who is eligible (especially for those who have already obtained a PPP Loan). Here are the relevant highlights for you.
Additionally, certain expenses have been added to the list of excludable/forgivable expenses for deduction under the PPP loan program, which may be useful to our readers:
The two most useful changes for many of our clients will be the restriction on publicly traded companies and the allowance of seasonal business PPP Loans. For many bar and restaurant owners who weren’t able to obtain PPP Loans during the first round of loans, this will provide a possible second bite at the apple.
Moreover, those of you who did obtain a PPP Loan may be eligible for a second-round loan if your gross receipts for any one quarter in 2020 were less than 25% of the same quarter for 2019. Businesses who meet this criterion qualify for access to a second draw from PPP at 2.5x average monthly payroll. The good news for the bar and restaurant sector is that the multiplier is increased to 3.5x average monthly payroll. For bars and restaurants, the monthly payroll average will take into consideration cash tips (which will be based on employer records for past tips or a reasonable good-faith employer estimate of such tips).
As always, the attorneys of Gross McGinley are here to assist you.
Attorneys Jason A. Ulrich, Thomas E. Reilly, and Loren L. Speziale serve local and national clients across various sectors as part of Gross McGinley’s Business Services Group. Amidst the COVID-19 pandemic, they’ve shared various legal insights regarding the PPP Loan process and advised many bars and restaurants on business matters.