Legislature introduces plans to extend the paycheck protection program once the deadline expires
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With the Small Business Administration’s paycheck protection program expiring on March 31, an agreement to extend it for an additional two months is planned.
A bipartisan group of lawmakers passed the law extending the paycheck protection program on Thursday in the House of RepresentativesThis would move the expiration date to May 31st and give the SBA the power to process pending applications for an additional 30 days thereafter.
The bill presented by the Chair of the House Small Business Committee, Nydia Velazquez, DN.Y .; Rep. Blaine Luetkemeyer, R-Mo., Rep. Carolyn Bourdeaux, D-Ga .; and Rep. Young Kim, R-Calif., comes after a series of calls from lenders, corporations, and other proponents to extend the PPP.
Later on Thursday, an accompanying law was passed in the Senate with the same provisions, sponsored by a non-partisan group that included Senate Small Business and Entrepreneurship Chairman Ben Cardin, D-Md., Senator Susan Collins, R- ME and Sen. Jeanne Shaheen, DN.H.
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“Many small business owners, especially the self-employed, are only just trying to access the program for the first time, so not only is it right to give small businesses more time to capitalize on a vital lifeline like PPP. That is what needs to be done,” said John Arensmeyer, Founder and CEO of the Small Business Majority.
Growing calls to expand PPP
This year, through March 7, the program has approved 2.4 million loans totaling nearly $ 165 billion, just over half of the $ 284 billion allocated to the program when it reopened in January .
Given the program’s recent changes to the eligibility and calculation rules, as well as the ongoing technical problems with submitting applications, many feared that there would not be enough time to help small businesses that need help with accessing the money.
Last week 10 banking groups sent a letter to lawmakers asking for more time. In its own statement on Friday, the American Institute of Certified Public Accountants called the March 31 deadline unrealistic and called for an extension of at least 60 days.
The U.S. Chamber of Commerce has called for the program to continue until the end of the year, and a group of more than 100 trade organizations has asked lawmakers to extend the PPP until at least June 30th.
New rules created additional confusion
The rapidly approaching deadline is particularly a problem for sole proprietorships who were subjected to a new credit calculation formula that was announced in late February but didn’t go into effect until March 5, when the SBA was ready to accept applications according to the updated guidelines.
Many of the companies that may have benefited from the rule either missed the opportunity because they applied too early or may not have enough time to take advantage of the new rule before the program expires.
The 14-day priority window announced by the Biden government from February 24 to March 9 added to the confusion. The period was aimed at the smallest businesses that had been excluded from previous funding rounds, such as minority and women-owned companies, and it was misaligned with the other changes Biden’s team had made to the program.
Time is not on our side; These companies need a little more help and are ready to get the job done
Founder and President of AmPac Business Capital
“So many of Schedule C applicants missed the first round of a higher PPP loan opportunity and are at risk of missing out on that round of funding because it took until March 3rd to get the new forms,” said Hilda Kennedy , Founder and president of AmPac Business Capital, a PPP lender, during a hearing with the House Small Business Committee on Wednesday.
“Time is not on our side. These companies need a little more help and are ready to get the job done,” she said.
Lenders need more time
Due to the short time before the program ends, some lenders do not offer the new calculation at all.
JP Morgan Chase will calculate Schedule C filers using the old formula and close applications on March 19th. Wells Fargo announced that it will update its systems to reflect the new sole proprietorship rule, but will stop accepting new applications on March 23. Bank of America stopped accepting new applications on Tuesday.
Additionally, lenders fear that they will not have enough time to process loans and get final approval from borrowers by March 31st. The second iteration of PPP included increased security measures to protect against fraud, but slowed down the application process.
“So it would be important to have that extra time,” said Sam Sidhu, chief operating officer of Customers Bank, headquartered in Phoenixville, Pennsylvania. “Working backwards from the 31st could mean that most applications have to be filed by the 15th or 29th in order to have a chance to get done.”
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