Big news out of Washington, D.C., Thursday as a bipartisan group of Senators and House members have introduced legislation that would extend PPP for small businesses by two months.
According to a report from Politico, House Small Business Chair Nydia Velazquez (D-N.Y.) and Rep. Blaine Luetkemeyer (R-Mo.) announced an agreement to extend the deadline until May 31.
Congress must work to understand the current realities facing small business owners and extend PPP to meet their needs. – Nydia Velazquez (D-N.Y), House Small Business Chair
In a story published by CNBC, many of the changes implemented by the SBA and Treasury, along with technical issues in application submission have created delays to businesses seeking a lifeline after the crushing impacts of closures across the nation.
Glitches caused need to extend PPP
While many of the headlines will celebrate the extension as a way for even more small businesses to apply for funding, the bigger impact of the announcement is that thousands of small business that have already applied are still in SBA-induced purgatory.
Loans that have been submitted for weeks – some even months – have not been approved because of a term called E-Tran errors. After the first round of PPP, in 2020, the SBA implemented a new submission portal that lenders used for applicants. Based on all sorts of factors, mainly forgiveness applications, the SBA portal erroneously rejected thousands of applications.
In a public statement earlier this week, Velazquez said it would make no sense to end this program on March 31, the initial deadline for application and funding.
“The pandemic has caused unprecedented harm for small businesses, and it would be a mistake to withdraw support abruptly,” she said. “Congress must work to understand the current realities facing small business owners and extend PPP to meet their needs.”
According to reports from numerous media organizations, the House plans to bring a bill to the floor next week. It will need majority support from both parties to quickly pass, where it also needs to be passed by the Senate and signed by President Biden before Congress adjourns in April. More important, it must be passed before the March 31 deadline.
Why the need?
Among other reasons, the reason to extend PPP was largely to alleviate the fears of lenders, who had stopped taking applications well before the end of the program. They feared they wouldn’t have time to get the applications through the SBA portal
“Working backwards from the 31st, it might have meant that most applications would need to be submitted by the 15th or 29th to have a chance to get done,” Sam Sidhu, COO of Customers Bank, told CNBC.
According to Politico, it appears there is broad consensus to get the legislation through both chambers of Congress.
“The House will take up the bill using an accelerated procedure requiring support from two-thirds of members,” the article said.