The additional money is intended to expand eligibility for loans to include more nonprofit organizations than were previously eligible, as well as digital news services that provide local news and public health guidance during the pandemic.
Despite the added funds, however, the legislation does not extend the program, which is currently set to expire on March 31.
This is a problem because there is already an accumulation of applications still pending approval by the Small Business Administration. And, under current rules, any loan that has not been approved by March 31 will not be financed.
This means that banks must decide how long they want to accept new applications, as it now takes 24 to 48 hours for a bank to receive a response from the SBA on whether a submitted loan application has been approved.
In cases where applications have not been approved, the SBA may request more information, or flag a business owner as ineligible. Solving these problems can take additional days or weeks.
Bank of America, for example, stopped accepting new applications on Tuesday. “As the program’s largest creditor from the start, we have 30,000 orders in progress and we want enough time to complete the job and get each customer’s order through the SBA process by March 31,” said a bank spokesman in an email to CNN Business.
Banking associations, the American Institute of CPAs and others have called on Congress to extend the program beyond March 31, or at least allow the SBA to continue processing loan approvals for applications submitted before March 31.
As of March 7, SBA has made 7.6 million PPP loans, totaling $ 678.4 billion, since Congress created the program last spring, according to data from the federal agency.
More money for restaurants, venue operators and minority-owned businesses
Other provisions of the American Rescue Plan aimed at helping small businesses include:
Special relief for restaurants: The American Rescue Plan includes nearly $ 29 billion to create a grant program that provides direct assistance to restaurants.
Additional funding for Small Business Administration: To help the SBA manage all new programs that fell under its purview as a result of the pandemic, the bill allocates an additional $ 1.325 billion in its budget.