NEW YORK–Credit unions participating in the SBA’s Paycheck Protection Program or just looking to which of their members are most at risk, may want to pay attention to two industries crucial to the U.S. economy that say they are not just being hit particularly hard by the coronavirus pandemic but also by federal rules: the restaurant and hospitality industries.
Companies in those verticals are arguing some of the rules related to the PPP put certain companies at risk of not receiving funds.
The NYC Hospitality Alliance has been raising the alarm that hiring requirements attached to the Payroll Protection Program could push businesses away, according to Crain’s New York Business.
Specifically, the Alliance notes that under the rules, if businesses have the same headcount by June 30 as they did before the pandemic, PPP loans convert to a grant and need not be paid back. But the forgiven portion of the loan will be reduced if businesses don't reach their previous staffing levels.
"We are in the middle of a pandemic, and we don't know when restaurants will be back," Andrew Rigie, the alliance's executive director, told Crain’s New York. "Even then, we don't know what customer behavior is going to be."
‘Nearly Impossible’
Restaurateurs say it is nearly impossible to know how many employees they will need in June, telling the publication they don’t even know if they will be fully open by then.
The Alliance said the federal government should adjust the terms to allow the loans to be forgivable up to six months after restaurants and other businesses reopen. That would mean more time to get back staff.
The industry told Crain’s New York Business particularly in New York it would also like to see new rules allowing more of the loan to be put toward rent. Federal guidance on the loans indicates that only 25% of money can go to nonpayroll costs and still be forgiven.