The cloud becomes critical: PPP loans to cover technological needs

Dive brief:

  • A COVID-19 relief plan adopted by Congress last month includes a second round of Paycheque Protection Program (PPP) loans for small businesses, with new provisions to help businesses move to the cloud and worker protections such as employee personal protective equipment. Cloud legislation was introduced in October, but passed in late December.

  • The legislation updates the definition of operational expenses eligible for PPP funds to include any enterprise software or cloud computing service that facilitates business operations, product or service delivery, human resources and other expenses, according to the draft. law.

  • The PPP provision expanding coverage to cloud and software investments, introduced by Representative David Scott, D-GA, “will help small businesses deliver improved service in today’s modern economy,” said Scott in an October announcement.

Dive overview:

As businesses increased their reliance on the cloud to support remote working over the past year, IT departments have reassessed budget allocations. For small businesses, a PPP loan could help clean up and streamline the software infrastructure.

In the cloud, more usage means higher costs. Ready to increase cloud spending over the next few months, IT decision makers are dealing with a changing budget. On average, companies are already 23% over their cloud budget, according to an April 2020 Flexera survey of 750 cloud decision makers and users.

Small businesses face particularly tough financial times because every dollar counts towards the bottom line.

The Small Business Administration is distributing PPP loans to help small businesses particularly affected by the pandemic continue to pay their employees. Now, with the PPP update, cloud and software upgrades are seen as critical to the coming recovery.

“By including these types of expenses, Congress recognizes the important role of technology solutions for businesses,” Scott Talbott, senior vice president of the Electronic Transactions Association, said in a statement.

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