With its window for applications about to expire, President Biden today (3.30.2021) signed into law a two-month extension for small business owners to apply for a Paycheck Protection Program (PPP) loan.
The House and Senate had already approved the extention with bi-partison support. Congress and the President did not have to allocate any new funds with today’s extension. The PPP has about $110 billion left to lend.
Through March 7, the PPP has approved 2.4 million loans worth about $165 billion.
- Under the new rules announced by the Biden administration at the end of February, businesses with fewer than 20 employees received an exclusive two-week period to apply for loans.
- Bigger companies were shut out of the program during that time frame, part of an effort to ensure the hardest-hit businesses can receive the aid they need.
- Businesses can choose to spend the funds over any period of time between eight and 24 weeks. At least 60% of the money must be spent on maintaining payroll in order to receive full forgiveness.
- The average loan across all industries has been $64,428.
The PPP allows the loans to be forgiven if the borrower spends the funds in accordance with SBA guidelines. Those regulations permit outlays for payroll, rent, mortgage payments and utilities, among other charges.
The Paycheck Protection Program Extension Act will allow loan applications to the program—currently set to expire on March 31—for two more months and give the Small Business Administration 30 additional days to process loan applications made by the new May 31 deadline.
“This legislation will help ensure that small businesses that have already applied for a PPP loan will be able to get that loan processed, rather than risk seeing this program end before their paperwork can be completed. It will also provide more time for still-struggling small businesses that have not yet applied for a PPP loan to do so,”“Providing an additional two months for small business borrowers to access PPP funding and an extra month for SBA to process PPP loans is a common-sense step that will support the economic recovery.”
President and CEO. American Bankers Association
Earlier last week, the SBA noted that two million PPP applications have been held up by error codes and approximately 190,000 applications remain unapproved. This reinforces the great need for extending the loan application deadline.