[UPDATED 3/31/21] The PPP Extension Act of 2021 was overwhelmingly approved (92-7) by the Senate on March 25, 2021 – only a few days before this round of the Paycheck Protection Program (PPP) was originally scheduled to expire. An identical bill was passed by the House earlier in March. The Act which extends the PPP application deadline from March 31 to May 31, was signed into law by President Biden on March 30, 2021. In addition to extending the PPP application filing window by 60 days, the Extension Act provides an extra 30 days (through the end of June) for the SBA to finish processing applications received by the May 31, 2021 deadline.
According to a news release issued by the AICPA, one of several professional organizations that have been pushing for this extension of the PPP deadline, the additional 60 days for filing will greatly help small businesses, not-for-profits, and the CPAs that serve them. Many organizations need the extra time to complete existing PPP loan applications or file new ones to take advantage of the borrower-friendly changes announced by the Biden administration in late February (see related post). These new rules allowed some businesses with no employees, as well as independent contractors and sole proprietors, to receive extra funding by using gross income instead of net income to calculate the size of their PPP loans. Because some of the changes were not made official by the SBA until early March, potential borrowers needed more time to assess their financial situations and apply under the new rules. Lenders also needed more time to adjust their systems and process those applications.
The Extension Act also provides additional time for the SBA to address significant loan application process challenges and provides more opportunities for loans to be approved. Under prior versions of the PPP, the deadline to apply for a loan was also the last day to receive a loan, meaning that applications submitted in the final few days of the program had little to no chance of being approved before the funding was shut down.
However, the Act does not provide any additional funding for the current round of the PPP, which was allocated $290 billion by the Consolidated Appropriations Act of 2021, enacted in December 2020. Since the second round of the program opened on January 11, 2021, nearly $196 billion in PPP loans have been approved (through March 21, 2021). At the current lending rate, the original PPP funds are only expect to last through mid-April.
It is difficult to assess at this time whether Congress will enact legislation to supplement the original amounts allocated to the program. The recent passage of President Biden’s $1.9 billion stimulus package, in conjunction with Congressional concern about upcoming tax legislation, makes additional PPP funding questionable, at best.
Note that we are closely monitoring this situation and will post updates as developments occur. In the interim, should you have questions or comments, please contact Bob Grossman, Don Johnston or Mike Weber at 412-338-9300.