Responses to PPP Flexibility Act

Feels like yesterday that we were rushing to get in line ahead of the release of PPP funding. Our industry was hurting and this loan was the first meaningful step toward true financial assistance. While there were no shortages of bumps in the road, we saw most of our network successfully receive the funding.

Which begged the question, what was next?

Because of the framework of the loan many of us had to get creative. The window for forgiveness and the heavy emphasis on prioritizing payroll meant some of us were hiring back our staff while our doors were still closed, or training bartenders to be delivery drivers – with countless unique iterations in between.

We knew it wasn’t a perfect fit for restaurants, but we got to work making it work, while our industry got loud and advocated for adjustments that would have an outsized positive impact on the usefulness of the PPP dollars for restaurants.

And last week we saw the Paycheck Protection Flexibility Act pass with bipartisan flying colors, and we asked our network how this changed things (if at all) for the path ahead.

Unsurprisingly, what we heard back varied as much as the original usage of the loan.

For those that chose to frontload staffing to maximize forgiveness, the PPFA allowed for a shift back of labor to levels more aligned with day-to-day needs. Where doors are still closed, there was a sigh of relief that reopening could be driven more by their market and less by the PPP forgiveness window.

The overwhelming response was that while the PPFA didn’t cause massive changes to the path forward itself, it did give the freedom to customize the loan dollars a little more closely to your business needs, while also providing a corresponding dip in PPP related blood pressure spikes.

Here are a few quotes from our network on the impact of the PPFA to their businesses. 

It changes how we will execute our plan we were spending some money on staffing with the idea that we were going to have to get to 75% in eight weeks we were at six weeks when the legislation passed but instead of trying to get to that 75% with a lump sum payment right before we had to get there we can now spread that money over the allotted time.

No but we’ll get 95-100% forgiveness with 24 weeks versus 50-55% before.

It is great that it came – but I have already used most of mine according to the original rules. I was early in. I was one who had to bring people in to do “nothing” but we were creative with what we had them do. I got some costing research completed and some serious cleaning. Worked ahead on Facebook posts too. I’m on my last 2 weeks of the 8, and I have dropped the “extra” hours for this next payroll. Thanks for asking.

We made the decision from the beginning that in our restaurants we would only bring on the labor we needed based on sales volume. We thought we may need the cash in the future and didn’t want to end up in a situation where our PPP money was gone, but sales were still suppressed. We also made that decision because the PPP restrictions were too tight (FTE/salary adjustment penalties) and because we thought it was likely that they would loosen the rules or give us more time for forgiveness. The flexibility act is welcomed, but doesn’t change our plan. It simply means we’ll get 100% or close to 100% forgiveness without adding any labor that isn’t required by sales volume. We’re still holding out to see what the SBA application for forgiveness looks like in order to understand the best ways to maximize forgiveness. If the top line of the application is “all qualified expenses over 24 weeks,” then the starting number will be so high, that FTE reductions and Salary adjustment reductions won’t matter. They could change the application significantly though – we’ll see.