Small businesses have 2 more months to sign up

The Senate on Thursday passed the 2021 PPP Extension Law with overwhelming support, extending the deadline for the Paycheck Protection Program to May 31 from March 31.

Approval of the PPP extension came about a week after the House approved the bill, which will then be signed by President Joe Biden. In addition to delaying the application deadline by two months, the measure gives the Small Business Administration another 30 days to process the loans.

The extension was received with the support of creditors and small business groups.

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“This is definitely a victory for the smallest of small businesses,” said Alex Cohen, CEO of creditor Liberty SBF. He said he saw a huge increase in application volumes, especially from individual owners and independent contractors who may not have signed up for the first round of PPP or were unable to obtain financing.

Here’s what small businesses need to know.

1. The program deadline is now May 31, not March 31

Small businesses have two more months to sign up.

The extension will help creditors and companies that have found errors in the application process. In addition, in the current round of PPP, the SBA has increased security to deal with fraud. This meant that application times were much longer for some.

“I realized in the last week 10 days ago that there was definitely a hint of panic coming back,” said Chris Hurn, chief executive of Fountainhead Commercial Capital, a non-banking institution. Now that the project has been approved, everyone will be able to breathe a great sigh of relief, he said.

The SBA said there is about $ 79 billion in financing remaining, which was restarted in January with $ 284 billion.

2. There may be more time to apply for second draw loans

The additional two months may also open the door for small businesses that obtained a first PPP loan this year to apply for a second.

Some small businesses that recently won a first draw did not have enough time to apply for a second one, as usually eight weeks must pass between loans to allow time to spend money on the payroll.

This mainly affected individual owners who did not know that they were qualified to receive assistance through the program or were unable to obtain financing in the previous round.

“They will certainly be a big beneficiary of that extra time in the application process,” said Patrick Ryan, president and CEO of First Bank.

Of course, there are extra qualifications for a second sweepstakes loan beyond the eight week period. Small businesses should have a maximum of 300 employees and be able to show a reduction of at least 25% in gross revenue between comparable quarters in 2019 and 2020, according to the SBA.

3. Some creditors still have different PPP rules

Many non-bank lenders and smaller fintech firms kept their application portals open and intended to do so until the program’s expiration date, while many larger banks stopped accepting new applicants to finish everything in time.

Now, these banks are reopening their windows to help some borrowers, but some banks are following different rules.

For example, JP Morgan will resume accepting PPP loan applications and update its loan calculation formula for individual homeowners or the so-called Schedule C filers. The new application with the updated formula should be available to borrowers the next time. week, a spokeswoman confirmed.

Previously, the bank only allowed individual owners to use net income instead of gross revenue to calculate loan amounts, which would likely result in less money.

Wells Fargo and Bank of America have offered the new loan calculation formula for individual homeowners. In addition, the two banks confirmed that they will reopen PPP requests due to the extension.

4. Probably more SBA guidelines

Certainly, there are still doubts about the program, and the additional time may open the door to further guidance from the SBA.

On the one hand, individual homeowners who applied for loans before the updated calculation is announced are pushing for the rules to be applied retroactively. The difference in loan values ​​would mean thousands of dollars more in forgivable funds for some.

“It shouldn’t be at the expense of those who were diligent and got their early registrations,” said Keith Hall, president and CEO of the National Association for the Self-Employed.

Lenders also questioned the eight-week period between the first and second loans for individual homeowners, who do not have traditional payrolls. Because of this, some argue that they shouldn’t have to wait eight weeks to apply for a second loan.

“[The extension] it will give the SBA enough time to do the right thing on several of these issues, “said Hurn.

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