Categories: Loans

Mnuchin Wants To Fix Restaurants' PPP Woes

Treasury Secretary Steven Mnuchin said he wants to tweak the rules of the Paycheck Protection Program (PPP) to accommodate restaurants stuck between a rock and a hard place, according to a report by The Wall Street Journal (WSJ).

Loans under the PPP can be forgiven if the owners use at least 75 percent of the money to go toward payroll for employees or essential costs to keep the business open.

Despite starting the slow crawl toward reopening, many restaurants are following social distancing rules, which means they still can’t make back the money they’ve lost. Customers still don’t feel safe going out, with some saying they don’t foresee a return to their old habits anytime soon.

So, restaurant owners say bringing back most of their furloughed employees doesn’t make financial sense.

Mnuchin told the WSJ that he could see situations where it would be possible to make tweaks to the programs immediately as issues arose, saying he was “particularly sympathetic” toward the restaurant industry.

In the long term, Mnuchin said he wanted to work with Congress to make sure the program was helping restaurants with those sorts of issues.

The restaurant industry’s many lost employees claim an outsized chunk of the ranks of the staggering 7.7 million jobs lost in April, with three-quarters of that number being from food service or bars. And as nine in 10 restaurants in general are small businesses with fewer than 50 employees, many will be relying on the PPP loans.

A lot of them do not have kind forecasts, though — 60 percent say they don’t believe they’ll survive the pandemic, according to PYMNTS research.

For the time being, restaurants have been dragged into the new world of remote, digital service, with those that didn’t have it at all before now scrambling to implement infrastructure to do takeout orders. Some have taken to tacking on bonuses like toilet paper and soap to takeout orders as extra incentive, and others are relying on gift cards that can infuse cash immediately while giving customers a reason to come back when they reopen for good.

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New forms of alternative credit and point-of-sale (POS) lending options like ‘buy now, pay later’ (BNPL) leverage the growing influence of payments choice on customer loyalty. Nearly 60 percent of consumers say such digital options now influence where and how they shop—especially touchless payments and robust, well-crafted ecommerce checkouts—so, merchants have a clear mandate: understand what has changed and adjust accordingly. Join PYMNTS CEO Karen Webster together with PayPal’s Greg Lisiewski, BigCommerce’s Mark Rosales, and Adore Me’s Camille Kress as they spotlight key findings from the new PYMNTS-PayPal study, “How We Shop” and map out faster, better pathways to a stronger recovery.