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Senate Approves PPP Extension to May 31

  • Senate votes 92-7 to extend Paycheck Protection Program deadline to May 31
  • Measure goes to President Joe Biden for his signature
  • Senator Ben Cardin promises support for making revised non-employer loan formula retroactive to previous borrowers

Summary by Dirk Langeveld

The Senate has overwhelmingly approved an extension of the Paycheck Protection Program deadline, providing more time for small businesses to apply for forgivable loans and lenders to process these applications.

In a 92-7 decision, the Senate voted to extend the deadline from March 31 to May 31. The legislation also allows the U.S. Small Business Administration to continue processing applications until June 30.

The vote follows a 415-3 approval in the House of Representatives on March 16. The measure now goes to President Joe Biden for his signature.

Since it was launched at the start of the COVID-19 pandemic, PPP has approved loans to approximately 8.2 million borrowers and disbursed over $718 billion. The program helps businesses cover regular expenses during pandemic-related revenue shortfalls, and loans are forgivable as long as 60 percent of the funding goes toward maintaining payrolls.

The program expired in August, but was renewed with $284.5 billion in funding under the Economic Aid Act in December. The American Rescue Plan added another $7.25 billion. Program requirements have also been modified to direct aid to smaller companies.

Lenders and finance groups had lobbied for an extension to have more time to process existing applications and to adapt to changes the Biden administration made to the program. These included a revised formula allowing sole proprietors and other non-employer firms to use gross income rather than net income to calculate their loan and opening the program to business owners with non-financial felony records and those who were delinquent or had defaulted on a federal student loan.

An extension also gives borrowers more time to apply for existing funding, much of which has not yet been disbursed. As of March 21, the SBA had approved 3.1 million loans totaling $195.8 billion, with nearly $96 billion still available.

Two proposed amendments to the PPP extension failed in 48-52 votes along party lines. One, introduced by Senator John Kennedy of Louisiana, sought to bar PPP eligibility to anyone convicted of a felony related to a riot or civil disorder within the past two years. Another, introduced by Senator Marco Rubio of Florida, asked to limit the ability of the SBA administrator to prioritize certain borrowers.

Senator Ben Cardin of Maryland, chair of the Senate’s Committee on Small Business & Entrepreneurship, said he was opposed to all amendments and urged a “clean extension.” He said any revisions would prompt a return of the bill to the House of Representatives upon their return in April, by which point the program would have expired.

Cardin did hint that further revisions are likely to affect the program in the near future. Senators James Lankford of Oklahoma and Roger Marshall of Kansas read proposals that would make the revised non-employer formula retroactive to past borrowers and allow farms and ranchers categorized as partnerships to use gross income rather than net income in their loan calculations. This change that was implemented for many such businesses but ended up excluding many smaller family partnerships.

Cardin did not comment on the farm proposal, but pledged his support for making the revised non-employer formula retroactive. He said he is committed to pursuing this change when the House returns to session in April.

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