The concerns were not addressed by Biden government officials and lawmakers who focused on the Democrats’ $ 1.9 trillion aid project, which includes another $ 7 billion for the PPP, but would not extend the program. Members of Congress are just beginning to work to a potential extent, but with about $ 120 billion in PPP financing remaining, it is not possible to bet that they will act quickly to resolve the issue, fueling a sense of confusion among responsible creditors Granting aid.
“They have no answer,” said David Pommerehn, general counsel for the Consumer Bankers Association. “They are preparing for the worst case scenario, that is, the program is completely closed on March 31 at 11:59 am.”
The uncertainty marks the most recent drama surrounding the massive Covid-19 relief program, which has provided nearly 7.6 million loans to employers since its creation in March 2020. Loans are popular because they can be forgiven if employers agree to continue paying employees. But, since its inception, the PPP has been a roller coaster for borrowers and creditors because of ever-changing rules and changing deadlines.
On Tuesday, President Joe Biden and White House officials took a victorious turn in recent changes they have made to help ensure that smaller businesses have access to PPP, with the president visiting a hardware store in Washington that has received help.
But the White House message – including a comment by a senior National Economic Council official that there is still a long time to apply – did not capture the reality that PPP creditors are backing down and not universally adopting rules that Biden has promised to help smaller ones. companies obtain funds.
Rachel Ball, a sole proprietor who owns a corporate events business, was one of the Chase PPP candidates notified on Monday afternoon that the bank would not adopt the new rules that would allow companies like hers to qualify to receive more money. Ball, who uses Chase for his business bank, now faces the choice between betting on a different lender over time or settling for a smaller loan under old rules.
“I feel like I’m in limbo,” said Ball.
Chase spokeswoman Anne Pace said the bank supports calls for a PPP extension and would implement Biden’s changes if an extension is approved. Pace said that each application can take weeks to pass the approval and financing stages and that the bank is focused on the high volume of applications in its pipeline before the end of the month.
Chase’s comments echo those of bank trade associations that are asking Congress and the Small Business Administration, which manages the PPP, for a way to allow them to continue processing orders after March 31.
Banks warned that the SBA’s decision to strengthen anti-fraud measures this year introduced further delays in the application process due to the time it takes to resolve concerns raised by the agency after it reviews loan applications. Bank of America, which will stop receiving applications on Tuesday, said it has 30,000 in processing and wants to allow enough time for each to pass through the SBA by March 31.
In a March 5 letter to lawmakers, the American Bankers Association and other groups of creditors said they had “serious concerns” about how many PPP loans retained in the SBA application system will remain unsolved until March 31. Lenders also said they were concerned that new loans submitted to the SBA this month would remain pending when the SBA system was closed.
The National Association of Government Guaranteed Creditors is proposing that Congress create a “double deadline” that would require applications to be submitted by April 30 and then approved by May 31, with the last month being used to resolve issues that prevent loans.
The Bank Policy Institute and the Consumer Bankers Association, which represent the main PPP lenders, are asking the SBA to allow loan applications that generated error messages and “retention codes” to continue to be processed until completion by banks and the SBA by at least June 30. The agency could implement the proposal by granting “conditional” approval and committing funds for orders that arrive before March 31.
“Doing so would help thousands of eligible borrowers whose applications are or will be subject to administrative delays without being on their own,” the two groups said in a March 3 letter to the SBA.
“[I]In the experience of our members, many of the smallest borrowers, and therefore those generally most in need of PPP loans, are generally subject to a greater number of SBA arrests than the largest, “they wrote.” As such, small borrowers, which Management and SBA have identified as needing greater and more streamlined access to funds, may be at greater risk of losing access to funds. “
The SBA and Congress are beginning to signal that they will work on a correction.
An SBA spokesman said the agency had not decided whether it could continue to process a pending order after the March 31 deadline for approvals had passed. Patrick Kelley, associate administrator for the SBA’s Office of Capital Access, which manages the PPP, told small businesses in a webinar on Monday that the agency is working on an “administrative solution” to allow PPP candidates to receive funds after the end of the program. With the problem unresolved, his advice to companies was “don’t wait” to sign up.
Legislators are beginning to support an extension of the PPP. The president of the Chamber of Small Companies, Nydia Velázquez (DN.Y.), is looking for a three-month renewal. Senator Jeanne Shaheen (DN.H.), a member of the Senate Small Business Committee, said that “extending the deadline for the PPP is a common sense measure that we can and should take.”
“Small businesses are still feeling the effects of the pandemic and there is a strong demand for the PPP program,” Velázquez told POLITICO. “With the PPP set to expire at the end of the month, I am working diligently with leaders in the Senate and the administration to reach an agreement on the extension of PPP in a way that meets the needs of small business owners. “
It is unclear how the House and Senate leadership will proceed. Spokespersons for Mayor Nancy Pelosi and Senate Majority Leader Chuck Schumer did not answer questions about whether they would also support the continuity of the PPP.
A White House official who declined to be identified said that if Congress wants to postpone the PPP deadline, “we are open to discussing a way forward with them”.
“At the moment, we are focused on delivering aid dollars quickly and equally in the time that we have left,” said the White House official, adding that the government is also focused on approving Biden’s aid project, which includes relief for Small business.
Some Republican lawmakers are willing to work on an extension of the program, according to advisers and lobbyists. Business groups are trying to frame the issue as a bipartisan victory after the huge party struggle over Biden’s relief bill.
“What better way to reach Republicans who are feeling burned by promises of bipartisanship than to support small businesses?” said Matthew Haller, chief lobbyist for the International Franchise Association.
Congressman Chip Roy (R-Texas), who led work on legislation last year to overhaul an earlier version of the PPP, would support an extension, a spokesman said. Congressman Blaine Luetkemeyer (R-Mo.), The leading Republican on the House’s Small Business Committee, said in a statement that the PPP “has helped millions of small businesses since its inception, and as vaccines become more widely available. available and the states begin to open, we must take a responsible look at the future of the program. “