$128 Billion in PPP Is to On account of Sundown March 31, Regardless of Dire Small Enterprise Want,
At around $ 128 billion, the paycheck protection program will expire at the end of this month – and there are no plans to revive it yet.
Neither the House nor Senate versions of the latest $ 1.9 trillion stimulus package known as the American Rescue Plan Act, which is expected to reach the President by March 14, includes an extension of the PPP. However, lawmakers are earmarking another $ 7.25 billion for the program, which restarted at $ 284.5 billion in mid-January. Legislators also intend to open it up to larger nonprofits.
The forgivable loan program, which has given more than 7.3 million businesses access to more than $ 679 billion in aid, is expected to end, for the most part, with funds remaining. However, business groups and owners themselves say that more time is needed to help those who have not previously been given access to the offer.
A coalition of business groups led by the U.S. Chamber of Commerce, which highlighted worrying August survey data that continues to show great concern among U.S. businesses, sent a letter to lawmakers this week urging them to end the PPP by Jan. December to extend. 2021. “Small businesses continue to struggle, especially minority-owned companies,” wrote business leaders. “Extending the PPP deadline to the end of this year will ensure that the small business segment, facing the biggest obstacles, does not lag behind.”
In other words, it is still necessary. While the first round of PPP, which totaled $ 349 billion, ran out in about two weeks as banks routinely preferred their existing and larger ticket customers, this final round was marked by delays.
Unless, for one reason or another, second-draw PPP borrowers were incorrectly immediately rejected, widespread delays impacted legions of other borrowers. Up to a third of applicants in the second draw received requests for more information after the Small Business Administration’s automated PPP system began to return error codes ranging from mismatched data between one round and the next to incorrect information – such as Applicants who did so were falsely told that they had a criminal record. According to the American Institute of CPAs (AICPA), up to 40 different potential error codes cause additional validation checks that can delay loan approval by weeks. The lenders eventually got tools to solve these problems. However, delays remain a cause for dismay for business owners.
Biden’s own February 22 motion for the SBA to revise their credit formula for solo prenuers to allow them to apply for loans at their gross income compared to their net income, thereby eliminating taxes and other costs, also contributed to delays. The guidelines for processing loans under the new formula, as well as updated applications, were not available to stakeholders until late March 3rd.
“Many PPP lenders have stated that they need at least a week to update their systems for these guidelines before accepting new applications,” said Barry Melancon, President and CEO of AICPA, in a statement Friday. “This gives small businesses less than two weeks to submit a full and accurate application.” He also called on the legislature to extend the PPP by at least 60 days – if not through this pending economic stimulus program, then through an independent measure. “The March 31 deadline just doesn’t make sense.”
Even the Biden administration’s 14-day exclusive application window, designed to help lenders focus their efforts only on businesses with fewer than 20 employees, expresses applications. Suitable companies with more than 20 employees cannot apply until the program reopens on March 10th.
Additionally, there is still strong borrower interest – despite the slow pace of loan approvals, says Mike Trabold, Paychex director of compliance risk, who notes that the program is reaching smaller and smaller borrowers and so the pace appears to be slow . “Because small businesses are [getting] Undivided attention from the entire credit community, “he says,” the guess is that it will help people get through the bureaucracy of lenders. And hopefully much of the problems with banks will go away. “
Of course, the PPP had to end at some point. Indeed, some financial experts suggest that lawmakers would do well to pay attention to thisvarious forms of help that may be better suited to helping growing businesses – especially as the economy shows continued signs of improvement.
“My position may not be popular,” said Ami Kassar, founder and CEO of MultiFunding, a small business loan advisor in Ambler, Pennsylvaniaa recent statement: “It is time to get the PPP to bed.” There are still good financing options in the SBA’s long-standing support offers for companies such as the Economic Injury Disaster Loan and the 7 (a) working capital loan programs that were spiced up during the pandemic.
“We need to create incentives for entrepreneurs to start and / or grow businesses,” said Kassar. “We need to be sure that there are incentives to increase the number of employees and ensure that companies have access to capital to grow, hire and expand.”
Whether the legislature is of the opinion that these efforts and an expansion of the PPP are mutually exclusive is still a matter of dispute. One thing is certain, if the program ends on March 31st, many companies will be left out.