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Source : Pixabay
March 10, 2021
Author : Alex Bustillos
The Payment Protection Program is still set to expire March 31st despite a new cash injection and more than $100 billion in still available funds.
Representative Blaine Luetkemeyer (R-MO) spoke in a hearing today on the next steps for PPP, bemoaning that the program is to be injected with an additional $7 billion in funds but is still set to expire in just three weeks, roughly a year since its inception.
The representative noted that the Small Business Administration’s (SBA) first round of PPP funds made up 5.2 million loans, totalling $525 billion, saving more than 50 million small business jobs, according to the SBA. The second round provided 2.4 million new loans for $164 billion.
Despite its many hiccups, PPP has been a relatively successful program, and fewer businesses are trying to get PPP loans. However, the SBA has told lenders that on March 31st, they will stop processing PPP loans. That means that if a business applies for a loan and a lender submits it to the SBA before the deadline, they may not get it if the SBA is not able to process it before the end of the month, Leutkemeyer said.
Leutkemeyer blasted the Democrats for “beefing up” the program and increasing the pool of eligible applicants with only three weeks left to the program.
Representative Claudia Tenney (R-NY) additionally noted that the program currently has $128 billion in funds still available.
Across the aisle, Democrats are celebrating recent changes by the Biden Administration to the program, which included a 14-day “exclusivity window” for small businesses with less than 20 employees, meaning that only loan applications from those businesses would be processed during that period.
In a press release today, House Small Business Committee Chairwoman Nydi Velázquez noted that the SBA has said these changes “have resulted in upticks in the percentage of loans going to underserved businesses.”
Bharat Ramamurti, National Economic Council Deputy Director at the White House, has said that 300,000 PPP loans have been processed for businesses with 5 employees or fewer during the exclusivity period. The period has also seen a 25 percent increase in first-time loan recipients and a 20 percent increase in loans to minority-owned businesses.
During today’s hearing, business leaders were invited to give their feedback to the House Small Business Committee and offer their suggestions on how to improve the program. Hilda Kennedy, Founder and President of AmPac Tri-State CDC said that the late February changes to the program by the Biden Administration was “as if a magic wand was waved over the portal, and all of a sudden several of our submitted PPP loans were being approved.”
But for others, the state of the Payment Protection Program is about as clear as mud.
Lisa Simpson, Vice President of Firm Services American Institute of Certified Public Accountants, called for the extension of the PPP program. “An extension of the PPP application deadline for at least 60 days after March 31, 2021 will provide an opportunity for the SBA to address its technical issues, provide critical guidance, and work with lenders and borrowers so that small businesses can navigate the application process and receive a loan,” she said.
While the issue is debated in committee, banks are also calling for an extension. Bank of America, the second biggest PPP lender in terms of dollar amount, stopped taking applications yesterday to ensure existing customers can meet the end of the month deadline.
On Monday, JPMorgan Chase, the biggest bank in the US, told would-be borrowers that if they wanted to take advantage of changes to the program for sole proprietors, they should seek out a different lender. JPMorgan simply did not have enough time to implement the new rules because of their application backlog and the quickly-approaching deadline.
Politico reports that the recent changes to PPP, in addition to the new cash injection and existing funds, have fueled “a sense of confusion among lenders responsible for issuing the aid.”
"They don't have any answers," Consumer Bankers Association general counsel David Pommerehn said, according to the outlet. "They're preparing for the worst-case scenario, and that is the program shuts down completely on March 31 at 11:59."
Photo via Pixabay.
Category : Disadvantaged Business Enterprises Minority Business Enterprises Minority Women Business Enterprises Small Business Enterprises Coronavirus Pandemic Diversity Outreach Economic Stimulus Federal Government Local Government Small Business Administration