The Paycheck Protection Program, (PPP), the government’s response to help smaller companies affected by the COVID-19 pandemic, includes an exemption that also allows the largest hotel and restaurant corporations to participate.
The $350 billion PPP is part of the $2 trillion COVID-19 relief legislation passed by Congress and is specifically aimed at businesses with 500 or fewer employees that can take out loans to help them avoid layoffs amid the outbreak.
The loans are made by banks, credit unions and other lenders and have a 1% interest rate. They are designed to keep employees on the payrolls for eight weeks. If a borrower doesn’t lay off workers, the government plans to forgive the loan, including interest. Borrowers may also use the money for rent and utilities. The maximum loan is $10 million.
While aimed at smaller companies, the exemption allows hotel and restaurant companies to take part, too, as long as they have no more than 500 employees at any single location. The National Restaurant Association lobbied for the restaurant-and-hotel exception.
A second exemption also was included in the legislation allowing the participation of franchise owners in any line of business who employ more than 500 people, again, as long as no single outlet employs that many.
The loan program will be administered by the SBA and made available through the more than 1,800 banks that it works with.
Features of PPP loans include:
Larger hospitality companies that opt not to turn to the PPP are expected to have another option soon. The Federal Reserve and the Treasury are putting together a Main Street Lending Facility for midsize companies, though details have yet to be unveiled.
Brian Parks is President of Commercial Lines at CCIG. Reach him at Brian.Parks@thinkccig.com or at 720-330-7923.
CCIG is a Denver-area insurance, employee benefits and surety brokerage with clients nationwide. We do more than make sure you have the right policy. We help you manage your long-term cost of insurance with our risk and claims management expertise and a commitment to service excellence.
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