WASHINGTON – Thousands of small businesses scrambling to stay afloat as a result of COVID-19 are getting extra time to apply for low-interest loans.
By a 92-7 margin, the Senate passed a bill Thursday extending until May 31 the deadline for Paycheck Protection Program applications. The popular Small Business Administration program was scheduled to sunset Wednesday, a timeline that could have prevented some 190,000 small businesses who have pending PPP applications from securing a loan.
The PPP Extension Act of 2021 also gives the SBA an additional 30 days beyond May 31 to process those loans. The House-passed measure now goes to President Joe Biden for his signature.
Maryland Democratic Sen. Ben Cardin, who chairs the Small Business & Entrepreneurship Committee, said it’s crucial the program be extended given recent eligibility changes and the large number of first-time applicants still seeking help, including the self-employed.
“This extension is desperately needed,” he said Tuesday. “This requires time to get these applications not only filed but processed. As a result, if we do not extend the program, there are going to be a lot of small businesses that are going to be left out.”
Help cannot arrive fast enough, according to the National Federation of Independent Businesses. Nearly one of every six small business owners report they will have to close their doors if current economic conditions do not improve over the next six months, the NFIB said.
The PPP was created as part of the CARES Act that Congress approved in March 2020. It offered firms employing 500 or fewer workers low-interest loans of up to $10 million (that often turn into grants) to cover their pandemic-related costs. Companies apply for the money through banks and other lenders that certify the loans, which are underwritten by the SBA.
The program been updated in recent months to target very small businesses and non-profits and give applicants the chance to take out a second loan. The large majority of loans don’t have to be paid back as long as businesses comply with the terms, which include a requirement that 60% of the amount goes to payroll costs.
Maine GOP Sen. Susan Collins, a co-sponsor of the effort to extend the deadline, said nearly 200,000 businesses are counting on the continued existence of a program has already saved 50 million jobs.
“These small businesses need this assistance now,” she said before the Senate’s vote. “We cannot allow an interrupting of this vital program that has made such a difference to our small businesses and their employees.”
Since its creation a year ago, the SBA has approved 8.2 million loans to small businesses totaling $718 billion. More than $50 billion remains available from the amount Congress has approved.
The program has been widely praised as successful, having doled out hundreds of billions to millions of businesses. But there have been miscues.
- Technical glitches slowed the initial rollout and there were allegations banks were playing favorites with longtime customers who got the loans first.
- Thousands of firms improperly received loans because they already had received one or were barred from doing business with the federal government, a House committee concluded in a report released in September.
- Nearly 400 publicly traded companies received almost $1.3 billion in federal forgivable loans meant for small businesses desperately trying to survive the coronavirus crisis, an independent analysis of financial record filings found.
- And there were concerns some small businesses, particularly bars, restaurants and theaters, could not take advantage of the program because of the way it was structured.
- But Congress has kept refining the program: targeting the smallest of companies; expanding what the money could be used for; allowing the hardest-hit firms to take out a second loan; and opening up eligibility to include live stage venues.