As hoteliers are all too familiar, the hospitality industry was among those hardest hit by COVID-19. When travel demand plummeted amid the extreme uncertainty the pandemic created, the Small Business Administration’s Paycheck Protection Program (PPP) was vital to keeping hotels across the country afloat. The program gave hoteliers the funds to pay staff, keep the lights on, and retain their assets as occupancy fell to historic lows. Back then, AHLA advocacy was instrumental in ensuring hoteliers could access tens of billions of PPP dollars. Now, we are pleased to share that hoteliers will benefit from an important update to the program that AHLA worked to secure.
In June, the Small Business Administration (SBA) issued new PPP eligibility guidelines for hotel owners. These guidelines clarify that owners who received a loan and utilize third-party management companies are eligible for PPP loan forgiveness for expenses paid via a management company. The changes will ensure that hotels facing improper loan forgiveness denials will have their cases properly adjudicated and, crucially, protect the thousands of hotel owners whose loans have already been forgiven. They follow months of painstaking AHLA advocacy work on behalf of hotel owners across the country.
Here is the backstory of what happened.
Establishing PPP
The passage of the Coronavirus Aid, Relief, and Economic Security (CARES) Act in March 2020 established PPP to rapidly distribute SBA-backed loans to small businesses in industries heavily affected by the pandemic so they could keep workers employed.
During the program’s rollout, AHLA helped secure several updates and provisions to help hoteliers access critical funds they needed to keep their doors open and support employees.
We successfully advocated to extend the program, build in flexibility, waive the affiliation rule, increase the loan caps for hospitality businesses, and evaluate employee counts on a per-property basis for qualification purposes.
Protecting an Essential Resource
The SBA’s initial PPP guidelines released in April 2020 included many hard-won provisions, and AHLA continued to seek clarity to ensure program eligibility for hoteliers.
But the question of eligibility resurfaced last year, when AHLA began hearing from hotel owners who were facing PPP loan forgiveness denials due to their use of third-party management companies. AHLA immediately reached out directly to SBA to correct the issue while providing support to owners navigating the agency’s appeals process.
When more owners came forward reporting loan forgiveness denials, we doubled down on our advocacy efforts. Our federal affairs team engaged the House and Senate Small Business Committees and lobbied members of Congress to express their concerns to SBA on the industry’s behalf. We took the issue all the way to the Biden administration, including the National Economic Council and the Department of the Treasury, to underscore the severity of the problem and the need for a positive resolution.
AHLA’s advocacy work paid off June 13, when SBA released updated PPP guidelines that resolve the issue of hotel owners’ PPP loan forgiveness eligibility. The updated guidelines address previous conflicting interpretations of PPP eligibility and clarify that hotels that used a third-party manager for staffing ultimately incurred payroll costs and are therefore eligible for PPP loan forgiveness.
This is a significant victory for our entire industry that could help thousands of hoteliers and impact billions in PPP loans.
AHLA’s government affairs team will continue to address these and other critical issues that matter most to our members.
