- House Small Business Committee leaders agree to two-month extension of Paycheck Protection Program deadline
- Extension still needs to be approved by the full membership of the House and Senate
- There have been several calls to extend the PPP deadline to give small businesses more time to apply and allow lenders to process changes to the program
Summary by Dirk Langeveld
The leaders of the House Small Business Committee have agreed to recommend an extension of the deadline for the Paycheck Protection Program, calling for this date to be pushed back to May 31.
The PPP was renewed with $284.5 billion in new funding as part of the Economic Aid Act. The U.S. Small Business Administration began accepting applications in January, and a deadline of March 31 was established.
The agreement between House Small Business Chair Nydia Velázquez and Rep. Blaine Luetkemeyer agrees to the extension as well as authorizing the SBA to continue processing applications for 30 days after deadline expires. The proposal will go before the full House membership next week and needs Senate approval as well to go into effect.
The Federal Reserve has already extended its liquidity facility backing PPP loans to June 30. This facility provides loans to lenders, who in turn pledge the PPP loans they approve as collateral on the funds from the Fed.
“The high level of demand for PPP loans is a testament to the program’s effectiveness and the lingering impact of the pandemic,” said Velázquez. “It’s clear that small businesses still need help but lingering issues in the program have led to the need for Congress to consider a short-term extension beyond March 31.”
Velázquez also praised the Biden administration’s changes to the program, which aimed to provide greater equity through actions such as a two-week exclusive period where applications were only open to companies with fewer than 20 employees, revising the loan formula to make it more accommodating to sole proprietors and other non-employer firms, and allowing business owners with non-financial felony convictions or federal student loan delinquency to apply for the forgivable loans.
The SBA recently released data showing that these changes have broadened access to the program, but they have also created challenges for lenders. These hurdles come on top of existing challenges, including a more stringent fraud review process which is creating delays and backlogs of applications that have led some lenders to stop taking new submissions.
The program will be further updated under the American Rescue Plan, which President Joe Biden will signed into law today. This legislation adds $7.25 billion to the program and extends eligibility to larger nonprofits and digital news companies.
Several lenders and financial industry trade groups have lobbied for an extension to the PPP deadline to help them adapt to the changes. These include the American Institute of Certified Public Accountants, which called for the two-month extension as well as a corresponding extension of the April 15 tax filing deadline to allow accountants more time to guide small business owners through tax changes resulting from PPP and other relief programs.
As of March 7, 2.4 million forgivable loans totaling approximately $165 billion had been approved in the latest round of PPP.
