President Joe Biden signed the Paycheck Protection Extension Act of 2021 into law today. The new law extends the filing deadline for Paycheck Protection Program applications by 60 days. It also provides an additional 30 days for the Small Business Administration to finish processing applications received by May 31. The program was originally scheduled to end March 31.
The Act also provides SBA time to address significant loan application processing challenges. Banks and lending institutions are reporting confusing validation and error codes, delayed guidance, and changes to the PPP loan amount calculation for self-employed borrowers.
Patrick Kelley, associate administrator for the SBA’s Office of Capital Access, said last week that 190,000 applications were held up in the SBA’s platform due to unresolved error codes related to validation checks set up by the SBA to screen fraudulent applications.
SBA has until June 30 to process the loans. Bus and motorcoach companies still contemplating applying for the forgivable loan should act quickly.
From the program’s opening on January 11 through March 21, the SBA has approved more than 3.5 million loans totaling nearly $212 billion. It is anticipated that current funding, approximately $79 billion, will be exhausted by mid-April.
As the economy continues to improve, Congress has not indicated whether there will be a third draw for remaining distressed businesses.
Along with changes created by the Act, additional changes were also made by the Biden Administration that include:
- Changing the PPP loan calculation formula to help sole proprietors, independent contractors, and self-employed individuals receive more financial support.
- Set aside $1 billion for businesses in this category that do not have employees and are located in low-and moderate-income areas.
- Eliminate a restriction preventing small business owners with prior nonfraud felony convictions from obtaining relief through the PPP.
- Remove a rule preventing small business owners who are delinquent on federal student loan payments from securing a PPP loan.
- Allow noncitizen small business owners who are lawful U.S. residents to use individual taxpayer identification numbers (ITINs) to apply for relief.
The combined first and second loans as of March 28, 2021, totaled 8,728,494 loans processed totaling over $734 billion through 5,476 lenders.