Paycheck Protection Program Out of Funds, No Longer Accepting Applications
The Paycheck Protection Program has run its course after providing well over half a trillion dollars in loans to small businesses across the U.S.
Last week, the Small Business Administration (SBA) announced that funds for the Paycheck Protection Program (PPP) have run out and that the program will no longer be accepting applications.
“With the portal closed to most lenders, America’s banks will remain focused on helping borrowers still in the pipeline resolve SBA hold codes and other outstanding loan issues, so they can receive their PPP funds,” said Ian McKendry, spokesperson for the American Banking Association.
While the funds for new applicants are gone, the SBA says that it has set aside $6 billion for previously submitted applications that have stalled due to specific issues with banks and lenders. Another $8 billion has been reserved for PPP loans made by “community financial institutions” that provide financial services to minority communities.
The deadline for PPP applications had previously been extended to May 31st in order to service hundreds of thousands of outstanding applications. According to the SBA, the PPP has resulted in small businesses receiving over ten million loans worth around $780.5 billion in total.
UPDATE: PPP Loan Application Deadline Extended to May 31
(March 31, 2021)— President Joe Biden signed the PPP Extension Act of 2021 on March 30, officially extending the deadline for applications to the Paycheck Protection Program until May 31.
“Without somebody signing this bill today, there are hundreds of thousands of people who could lose their jobs, and small and family businesses that might close forever,” said Biden. “And, as you know, small business is the backbone of our economy, representing almost 50 percent of all the employees in America.”
The president’s signature was the final step needed after the U.S. Senate passed the PPP Extension Act last Thursday by a vote of 92-7. The bill is essentially the same one passed earlier by the House. A group of Republican senators introduced a measure to amend the bill to restrict the ability of the Small Business Administration (SBA) to prioritize lending to certain borrowers over others, but that measure failed by a vote of 52-48.
The PPP Extension Act is expected to allow nearly 200,000 pending PPP loan applications to be processed. “These small businesses need this assistance now in order to pay their employees and stay afloat,” Senator Susan Collins (R-Maine) said last week during a speech on the Senate floor.
According to the Small Business Administration, more than 3.5 million PPP loans have been approved since the program was relaunched in January 2021. The $1.9 trillion stimulus plan signed into law earlier in March included an additional $7.25 billion in funding for the PPP, providing a lifeline to small businesses during this time of economic uncertainty.
“The overall recovery remains uneven across small business industries,” said Holly Wade, executive director of the National Federation of Independent Business Research Center. “It is crucial that small businesses are given the resources and flexibility needed to ensure they will have a successful recovery.”
House Votes to Extend PPP Loan Application Deadline to May 31
(March 24, 2021)— Last week the U.S. House of Representatives passed the PPP Extension Act of 2021 to extend the deadline for Paycheck Protection Program loan applications from March 31 to May 31. The bill passed overwhelmingly, 415-3, riding a wave of support from business groups and trade associations. The bill has been sent on to the Senate, where it needs 60 votes to pass.
While the initiative to extend the PPP deadline has bipartisan support, the bill faces some difficulty. A group of Senate Republicans introduced their version of the legislation that limits how the Small Business Administration can allocate PPP funds.
“We hope the Senate will move the bill quickly, that no one will stand in the way, that no one will block it,” said Senate Majority Leader Chuck Schumer (D-NY). “We are not going to end this week without passing an extension and I’m confident that once again we will get the job done.”
Following the passage of the PPP Extension Act in the House, a coalition of nearly 100 hundred trade associations and chambers of commerce sent a letter to the sponsors of the bill, thanking them for their “bicameral leadership and swift bipartisan action.”
“Nearly one year into the COVID-19 pandemic, the continued liquidity challenges of the small business sector are acute, especially for those businesses limited by dramatic capacity restrictions and other critical health and safety protocols in place to protect the public, consumers and workers from COVID-19,” the letter says.
“Thank you for extending the window of opportunity for pandemic programs to effectively impact the affected small business sector, especially those traditionally under-invested and underserved groups which must also be given the chance to succeed.”
The coalition, which includes the National Association of Home Builders, the National Association of the Remodeling Industry, and the Associated General Contractors of America, also highlighted in the letter several issues that continue to plague the PPP:
“While we realize the Small Business Administration (SBA) is under tremendous time constraints and is struggling with internal resource issues, our members are highly concerned by the lack of progress on major Paycheck Protection Program (PPP) processing issues, including hold/error codes and application rejections due to Taxpayer Identification Number (“TIN”) issues or mismatches, in addition to many unresolved technical problems with the current PPP process. These delays and denials may put many applicants in danger of not making the March 31st authorization deadline.”