Anyone who follows macro trends in the construction industry knows that investment in construction technology is reaching an inflection point: our industry continues to lag other major business sectors when it comes to tech adoption.
A recent study by the McKinsey Global Institute provides that construction can realize a $1.6 trillion benefit if it can increase its production and that “the tools for that more productive approach are increasingly available through digital technologies…” To this end, the barriers to making such investment in technology have never been lower. This explains why construction technology is such a hot area of focus right now.
The idea that investment in technology is of critical importance was not lost in the Paycheck Protection Program (PPP), which was recently updated to expand how loans may be used. Most noteworthy, is that 40% of loan proceeds may now be used to cover expenditures in construction technology applications. Additionally, applicants now have until May 31, 2021 to submit applications for relief.
This new guideline applies retroactively to First-Draw loans, which means that you may be entitled to forgiveness if you used your First-Draw PPP loan on business software or cloud computing services to facilitate a remote work environment. It also applies for Second Draw loans. This is very good news for any construction companies that recently invested in software and/or other cloud platforms or are planning to do so.
In summary (for purposes of this article which focuses on software investment), the Small Business Administration (SBA) has expanded the list of authorized uses of loans from the initial contemplated uses (issued in Spring of 2020) for “payroll” to also include (as amended in late 2021) “payments for any business software or cloud computing service that facilitates business operations, product or service delivery, processing payment, or tracking of payroll expenses, HR, sales and billing functions, or accounting or tracking of supplies, inventory, records and expenses.”
Eligibility criteria for Second-Draw PPP loans was also updated to ensure that small and mid-sized firms are prioritized. Congress authorized an extension to the PPP application deadline to May 31st with an additional 30-day period for processing pending applications.
According to the SBA’s latest report, 7,555,249 loans have been approved in total. The construction industry has been among the hardest hit by the pandemic, receiving upwards of $21.7B in PPP loans coming behind hotels and restaurants, which took over $29.7B.
The bottom line: technology adoption is among the most important factors necessary to bring our industry forward. The new changes to the PPP should further incentivize our industry to continue to invest in tech advances.
If you have any questions about how this updated framework may apply to your business, you should consult with your professional advisors and/or lenders.
Click here for more details as to the legislative history and explanation of this framework.