New round of federal funds could be crucial for Whatcom restaurants, hotels
With the latest federal stimulus package approved and ready to roll out, it appears that it will provide more help for Whatcom County small businesses, particularly the hard-hit restaurants and lodging establishments.
The $900 billion package was signed by President Trump on Sunday, Dec. 27, providing a wide range of financial assistance, including $600 stimulus checks and a new round of the Paycheck Protection Program.
A second round is needed because the first one missed many of the businesses it was intended to assist, said CJ Seitz, director at Western Washington University’s Small Business Development Center.
Seitz said the first round of PPP loans was popular with Whatcom County’s small businesses, but there were three issues that made it difficult for them to make the most of the program.
“A confusing initial application process, questions about eligibility and an early lack of participating banks caused many businesses to hesitate,” Seitz said in an email. “The whole process was just too confusing for many local small businesses to follow.”
The first round of PPP also was built so that it would end around August 2020, because there was an expectation that the U.S. would have the pandemic under control by then, Seitz said.
Since the pandemic only worsened, businesses are dealing with pandemic restrictions with little financial help. That makes this second round very important, and it helps that many of the earlier issues are resolved, Seitz said.
A boost to restaurants
A special provision was written into the second round of PPP that focuses more help for the lodging and restaurant industries.
Seitz said the new provision will allow these businesses to borrow up to 3.5 times their payroll for the qualifying period. Also, more business expenses can be paid with PPP2 funds. Businesses like wedding facilities and other meeting places also qualify for special assistance, since most of them have been closed for more than seven months.
Restaurants and hotels have been particularly hard hit during this pandemic. In Whatcom County, dozens of restaurants and drinking establishments have either permanently or temporarily shut down during this current period that bans in-person dining. Hotels have also been hit hard as people stay home and avoid traveling to try and slow the spread of COVID-19.
How to prepare
Business owners can soon start applying for PPP help. A few things to note about eligibility:
▪ The owner must have been in business before Feb. 15, 2020.
▪ Qualified businesses can be corporations, limited liability corporations, sole proprietors, self-employed and independent contractors.
▪ The borrower must have used, or will use, all of any previous PPP loans it received.
Seitz offers these bits of advice for businesses on how to prepare:
▪ Get your facts together: Calculate your income by quarters, 2020 versus 2019. PPP2 borrowers will need to certify at least a 25% drop in gross revenues, minus PPP1, unemployment or other grants.
▪ Build a lender portfolio: Contact local banks, community lending institutions, credit unions and online lenders. Ask whether they’re going to participate in the next round of PPP lending. Get contact information for individual lending officers. Create a list of multiple lending sources.
▪ Watch for application openings: Monitor your selected lenders for application information and act quickly – the program will be rapidly overwhelmed with applicants so act fast.
This story was originally published December 28, 2020 at 12:00 AM.
