In this 4-minute read:
- How can your hotel, restaurant or other food/accommodations business request 3.5X your monthly average in a second draw PPP loan?
- What businesses fit into the NAICS code 72 category?
- How do you know if you’re eligible for a second draw PPP loan?
- What if I fit into NAICS sector 72 but haven’t yet applied for a PPP loan? Can I still qualify for 3.5x my monthly average on a first draw loan?
It’s no secret that food and lodging businesses were hit especially hard over the past year with the shutdowns and limitations set in place due to the coronavirus pandemic. Because of this, for 2021, the SBA has raised the maximum loan amount for accommodation and food services businesses to 3.5 times your monthly average, rather than the standard 2.5X.
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How much more can your hotel, restaurant or other food or accommodations business (NAICS code 72) request with a second draw PPP loan?
Any business that fits into the NAICS code 72 for food and accommodation businesses qualifies for a larger maximum loan amount for their second draw of the PPP loan. This new maximum amount is 3.5 times your average monthly payroll costs (up to $2 million).
You can determine your monthly average payroll costs by using your payroll averages from 2020 or 2019 (your choice). You’ll just take your payroll costs from the year you choose and divide that by 12 to get your monthly average. Then you have your payroll amount that you can multiple by 3.5 to determine your maximum loan amount.
Just be sure that as you determine your payroll costs, payroll is capped at $100,000 for each employee on an annual basis. So if an employee (or you, as a sole proprietor, contract worker, or self-employed individual) made $150,000 in 2020 (and that’s the year you were using to determine your payroll average), then you would subtract $50,000 from your total payroll amount before you divide it by 12 to get your monthly average.
For more details on calculating your maximum second draw PPP loan amount, visit our second draw PPP FAQ.
What businesses fit into the NAICS sector 72 category and can request 3.5X their monthly average for a second draw PPP loan?
Any business whose NAICS code begins with 72 fits into this accommodation and food services category and may request up to 3.5 times their monthly average payroll costs on their second draw PPP loan application.
Businesses that fit into this category include:
- Hotels and motels
- Casino hotels
- Bed and breakfast inns
- All other traveler accommodation
- RV Parks and recreational camps
- RV parks and campgrounds
- Recreational and vacation camps
- Rooming and boarding houses, dormitories, and workers’ camps
- Food service contractors
- Caterers
- Mobile food services
- Drinking places (alcoholic beverages)
- Restaurants and other eating places
To determine your NAICS code, you can visit census.gov/naics.
How do you know if you’re eligible for a second draw PPP loan?
There are certain eligibility requirements that you must meet in order to apply for a second draw PPP loan. Those requirements are as follows:
- You previously received a PPP loan; and
- You used (or will use) the full amount of your first PPP loan on authorized expenses before your second draw loan is disbursed. (Note: Your first draw loan doesn’t need to be forgiven to qualify); and
- You have 300 or fewer employees; and
- Your business experienced a revenue reduction of 25% or greater in any quarter in 2020 compared to 2019
For more details on second draw PPP eligibility, visit our Second draw PPP loan eligibility FAQ.
What if I haven’t received a PPP loan before? Can I still get 3.5x the monthly average on my first draw loan?
If you didn’t receive a PPP loan already, you can (and should) still apply for a first draw loan. However, only qualifying food services and accommodation businesses (NAICS code 72) applying for a second draw PPP loan are currently eligible to request 3.5 times their monthly average payroll costs.
Businesses, non-profits, partnerships, independent contractors, self-proprietors, gig workers, and qualified self-employed individuals applying for first draw PPP loans can request up to 2.5 times their average monthly payroll costs until otherwise noted by the SBA. That’s still a large loan amount of what, after you apply for loan forgiveness, can become essentially “free money,” so we recommend still applying–just be sure to do so by May 31. 2021. If you hurry, you can get your first and second draw PPP loans and double your emergency stimulus!
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