Act fast! Biden Expands PPP – $ 79 Billion Remains But 190,000 Applications Already On Hold
Update: On March 30, 2021, President Biden enacted the PPP Extension Law of 2021.
Small business owners will have two more months to access the popular Paycheck Protection Program. The Senate voted 92 votes to 7 on Thursday to extend the candidacy deadline to May 31, from March 31; he voted separately on two amendments which would have slowed his progress. The bill also gives the Small Business Administration another month to process loans approved before the deadline. An accompanying invoice passed the House last Tuesday.
“This bipartisan legislation comes at a time when small business owners are still grappling with the economic effects of the pandemic, and extending the paycheck protection program even for a short time to deplete existing funds,” will help some of the small businesses that need it most, “Neil Bradley, U.S. Chamber of Commerce policy director, said in a statement. He cited recent survey data showing that 59% of small businesses companies predict that a return to normal will take more than six months.
The program itself has been hampered by delays. Many second-draw PPP borrowers categorically rejected by mistake as some have been told, wrongly, that they had criminal records, among other inaccuracies. During a Senate hearing on the effectiveness of Covid-19 relief programs held yesterday, the SBA Capital Access Office Associate Administrator Patrick Kelley noted that two million PPP loan applications have been blocked by error codes by the SBA’s automated PPP system. The error codes come from a number of issues, including mismatched data from round to round. He added that around 190,000 requests remain pending.
Kelley also noted that the program could run out of funding as early as mid-April if application approvals continue at their current rate. At the hearing, he said that as of March 21, there was $ 79 billion left in the PPP – after reopening for the third time some lenders Jan. 11 with $ 284.5 billion available. The program was further replenished with $ 7.25 billion after the adoption of the American Rescue Plan Act.
To date, the SBA has approved 8.3 million PPP loans valued at $ 718 billion. This year, 3.1 million businesses used $ 196 billion.
Interest in the program does not seem to be slowing down. Last week, First Bank, a lender based in Hamilton, New Jersey, received 30 more requests and nearly half of them were from new P3 applicants. So far in 2021, First Bank has received 831 applications for $ 110 million, but the bank’s chief executive officer, Patrick Ryan, notes that not all of these loans have been approved and funded.
“We believe that expanding PPP is good news for our businesses and local communities,” said Ryan. “We continue to receive applications from companies in need, and we do not believe that an arbitrary date should prevent small businesses from accessing the financing they need that has already been approved by Congress.”
And while major lenders such as Bank of America and JPMorgan Chase had halted or scaled back their programs in recent weeks, both said today they plan to restart their programs at full capacity. BofA suspended its program on March 9; Chase stopped accepting PPP applications on March 19.
The two institutions also say they will allow solopreneurs to start applying for PPP using a improved loan formula, which the Biden administration announced on February 22. This formula allows sole proprietors, independent contractors and independent contractors – referred to as Schedule C or Schedule F filers – to apply for loans based on their gross income relative to their net income, which removes taxes. and other expenses. Neither lender offered a timetable.
While the extension was easily passed by the Senate, two amendments were not approved. An amendment, proposed by Sen. Marco Rubio (R-Fla.), Would have prevented the SBA from prioritizing certain PPP candidates over others, beyond what is in the law. So, for example, the SBA would not be allowed to comply with a request by the Biden administration to give special access to smaller businesses, which is what happened on February 22. Two days later, the SBA stopped processing loans from businesses with more than 20 employees for 14 days. At the time, the SBA clarified that it would continue to process all requests that lenders had already submitted to the agency before the exclusivity period.
A failed Second Amendment, from Sen. John Kennedy (R-La.), Sought to ensure that those convicted of criminal riots in the past two years would be prevented from accessing PPP loans. He noted previously that one in 20 American demonstrations between May 26 and September 5, riots, looting and similar violence left 47 people dead and damaged small businesses.
Reversing the two changes sets the stage for swift passage, as the PPP extension bill now heads to the president’s office, rather than returning to the House for further discussion.