On Tuesday, March 30, 2021, President Biden signed the PPP Extension Act of 2021, which pushes the March 31, 2021 small business loan assistance program expiration date back by two months to May 31, 2021. Established in March of 2020, the Paycheck Protection Program (PPP) has offered loan assistance to many U.S. small businesses which were struggling to retain employees and keep their businesses open in the face of the COVID-19 pandemic.

Woman at computer filling out PPP application after the PPP Extension Act of 2021 was signed.

Additional Funding

The PPP has received several new infusions of loan funding from the Federal government, since it launched – the last of which came in December 2020. Though of the 2020 funding, nearly 40% remains unused, the nearly $2 billion American Rescue Act which was signed into law earlier in March 2021, added another $7 billion to the total funds available to those small businesses in need. That came as welcomed news to those small businesses which were either unable to secure a PPP loan during the initial application periods or which were looking to obtain a second PPP loan. The PPP Extension Act of 2021 gives those who are still looking to secure a PPP loan a bit more time to submit their application. It also gives the Small Business Administration (SBA), which is responsible for reviewing and administering applications, a more reasonable timeframe in which to do so, given how recently the government made more funding for the program available.

Processing Delays

Due to a fraud detection procedure that is part of the application review process, the SBA has experienced processing delays that have vastly slowed down the expediency of application approval. Even as the March 31, 2021 program expiration date loomed large, the fraud detection issue continued to contribute to the inaccessibility of PPP funding, further necessitating the need for an extension of the program’s expiration date.

Alterations to Eligibility Requirements and Application Windows

New adjustments to the eligibility requirements a borrower would need to satisfy in order to qualify for a PPP loan were detailed in the American Rescue Act. These adjustments included expanding the program to open up PPP loans to sole business proprietors, the self-employed, and independent contractors, as well as to business owners with prior felonies unrelated to fraud, and those who were delinquent in repaying their student loans. Also altered through the American Rescue Act were the terms by which new loan applications would be accepted. These terms put in place a two-week period during which only those businesses with 20 employees or less would be permitted to submit an application, effectively providing a path for women and minority-owned businesses to gain much-needed access to funding they’d previously gotten shut out of by larger, more financially-solvent businesses which were ahead of them in the application line last year.

Making the two-week allowance for these smallest of small businesses to have their applications processed first, however, has simultaneously delayed those larger businesses which are also still in need of PPP funding from applying, as many lenders had already stopped accepting applications they felt couldn’t be processed in time to meet the original March 31, 2021 deadline. The two-month extension granted through the PPP Extension Act of 2021 gives these businesses another opportunity to also apply for funding. The Act also provides the SBA with an additional 30-day window during which to process applications so that they can continue their processing through June 30, 2021.

If you have questions about the Paycheck Protection Program or the PPP Extension Act of 2021, please contact your Untracht Early advisor.