As small businesses struggle to stay afloat one year into the, the federal Paycheck Protection Program — created to help keep employees on the job and doors open — is set to be extended for another two months. On Thursday, the Senate voted 97-2 to shift the deadline to May 31.
This comes as the popular program was set to expire at the end of March, cutting off access to funding. The extension had already passed in the House with bipartisan support 415 to 3. It now heads to President Joe Biden's desk where he's expected to sign it, giving hard-hit businesses more time to get government aid heading into late spring and summer.
The extension would also provide the Small Business Administration an additional 30 days through the end of June to process loans submitted by the new deadline.
"Our hardest-hit small businesses are depending on an extension of the Paycheck Protection Program to keep the lights on and continue operating beyond March 31st," said Democratic Senator Jeanne Shaheen of New Hampshire. "With the PPP deadline fast approaching, I'm very pleased the Senate took action to pass my bipartisan legislation with Senators Collins and Cardin that will give small businesses additional time to apply for PPP loans."
As of March 21, the Paycheck Protection Program has approved more than 8.2 million loans totaling more than $718 billion since it was created nearly a year ago as part of the first round of coronavirus relief. A second round of PPP funding was included in the December relief package.
"The PPP has been an enormous success, sustaining millions of small businesses and tens of millions of jobs," said bill co-sponsor Republican Senator Collins of Maine. "Since last spring when we created the PPP, Members of Congress on both sides of the aisle have repeatedly taken action to increase funding and flexibility for the program. I am pleased that Congress came together once again today to help more small businesses to access this lifeline by extending the deadline to apply to receive these forgivable loans."
While the program has been popular for helping businesses stay afloat amid the pandemic, critics have pointed to its challenges getting funds to smaller and minority-owned businesses. The program's second round launched in January with a more targeted approach.
In late February, the Biden administration announced several additional changes to the program, including a 14-day window where only businesses with fewer than 20 employees could apply and a revised loan formula to help get more money to sole proprietors, independent contractors and self-employed people, among other measures.
Early indicators suggest the changes are working. As of early March, Small Business Administration data shows average loans to minority-owned businesses were up 20% during the two-week exclusive window from the average over the previous 10 days, and loans to women owned businesses were up 14% and loans to small businesses in rural areas were up 12% over the same periods.
For all 2021 loans by the program, 76.4% are for $50,000 or less, 86.6% are for $100,000 or less and more than 91% are for $150,000 or less. The loans will be forgiven if businesses comply with requirements like keeping employees on the payroll and maintaining wages.
On March 10, the House Small Business Committee held a hearing on the next steps for the Paycheck Protection Program. During the hearing, lawmakers and witnesses raised concerns the Small Business Administration will stop processing loans at the end of the month, leading some lenders to stop accepting applications ahead of the deadline. This has prompted calls by some for the extension, including time for processing.
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