4/3/2021

Financial News

Senate Passes PPP Deadline Extension to May 31, 2021

Everything you need to know about the new PPP deadline and what’s to come in 2021.

Katie Lee

Marketing Manager

Senate Passes PPP Deadline Extension to May 31, 2021

The Senate has passed a bill that would extend the deadline for businesses seeking assistance from the Paycheck Protection Program (PPP). Businesses now have until May 31, 2021 to submit applications. The PPP Extension Act of 2021 also gives the Small Business Administration (SBA) an additional 30 days after May 31 to process any loans. Without the extension, the PPP application period was slated to end on March 31, 2021. This timeline would have prevented approximately 190,000 small businesses from securing loans despite their pending applications. 

First Round PPP Changes

On February 22, President Joe Biden announced changes to the second draw PPP in which the SBA established an exclusive  14 day period for businesses and nonprofits with fewer than 20 employees to submit applications. This was to ensure that even the smallest of businesses could receive the help they needed before the original program deadline of March 31.

To strengthen the relationship between the SBA and lending partners for the advancement of equity goals, fund delivery, and the prevention of fraud, waste, and abuse, the Biden’s administration also:

  1. Granted sole proprietors, independent contractors, and self-employed individuals more PPP funding by updating the original funding formula for the applicants in these categories

  2. Eliminated exclusionary restriction on PPP access for small business owners with previous non-fraud felony convictions. This change was also consistent with a bipartisan congressional proposal
  1. Eliminated PPP access restrictions on small business owners who have struggled to make student loan debt payments by eliminating the debt's delinquency as a disqualifier to participation
  1. Ensure access for non-citizen small business owners who are lawful US residents by clarifying the use of the Individual Taxpayer Identification Number (ITIN) for the application of PPP loans

Additionally, for 2021 PPP loans, Congress seeks to reach small, low-, and moderate-income (LMI) businesses that had not received relief. To support these applicants, Congress has set aside $15 billion for small and LMI First Draw borrowers.

American Rescue Plan Act

The SBA is currently implementing the American Rescue Plan Act that President Biden signed into law on March 11th. The American Rescue Plan Act provides additional relief for small businesses across the nation, especially for hard-hit industries. Here’s what it has in store: 

  • $7.25 billion in additional funding for the PPP with expansion on eligibility for more non-profits and digital news services
  • Additional funding for the Suttered Venue Operators Grant (SVOG).  This program provides assistance for venues that had to shut down due to the pandemic. 
  • $15 billion in additional funding for Targeted Economic Injury Disaster Loan (EIDL) Advance payments, including a new $5 billion allocation for supplemental Targeted EIDL Advance payments for those businesses hit the hardest
  • $28.6 billion for the Restaurant Revitalization Fund, allocated for industry-focused grants
  • $100 million to establish a Community Navigator pilot program. This program allows the SBA to engage with local governments, state governments, and different organizations to help businesses in underserved communities. Grants will be given to improve COVID-19 assistance programs and resources.

COVID-19 Relief Options Available 

The SBA offers several options to help businesses, nonprofits, and faith-based organizations find relief during the COVID-19 pandemic. The current process of finding the right relief option for you and applying includes:

  1. Find a lender – Get matched with a lender in your area, or you can search for one of your own.
  2. Identify a PPP loan – First draw loans are available if you have not received one before; the second draw is for those who have already received a PPP loan
  3. The SBA is currently offering COVID-19 Economic Injury Disaster Loan (EIDL) and SBA debt relief for existing borrowers.
  4. The SBA is preparing to offer Shuttered Venue Operators Grant (SVOG) and Restaurant Revitalization Fund Grants.
  5. The SBA is contacting eligible businesses regarding Targeted EIDL Advance payments.

Why was the PPP created, and why are changes being made?

The National Federation of Independent Businesses stated that nearly one in every six small businesses will be forced to shut their doors if economic conditions do not improve within the next six months. 

In an effort to financially support small businesses, The PPP was created as a part of the March 2020 Congress-approved CARES Act. The original PPP offered businesses employing 500 or fewer employees low-interest loans up to $10 million to cover pandemic-related costs. Companies applied for the money through banks and lenders that certify the loans underwritten by the SBA. As we know, the government is continuing to put special focus on small businesses and nonprofits so people can get the funding they need to survive the pandemic. 

Maine GOP Senator Susan Collins, a co-sponsor of the bill that extended the PPP deadline, cited that nearly 200,000 businesses are counting on the program's continuation and that it has already saved 50 million jobs nationwide. Since the initiation of the PPP, the SBA has approved 8.2 million loans that total $718 billion. There is still more than $50 billion available for businesses from the amount that Congress has approved.

While many businesses are reopening, there is still economic strain as we return to a new normal. Businesses are still relying on support from these government programs. The first round PPP changes, deadline extension, and American Rescue Plan Act have been vital to helping businesses get back on their feet. 

Hatch is Here While You Wait

If you are one of more than 190,000 businesses waiting on the SBA to process your loan application, know that you are not alone. Hatch is looking to support you with Hatch Business Checking. Get the modern business checking account with no minimum balance requirements, no NSF fees, up to 5% cashback rewards on eligible debit card purchases, and discounts on business software. 

Click here to learn more about Hatch Business Checking and here to learn about how a business checking account could help your business succeed.

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