(PresidentialInsider.com)- Small businesses will now have another two months to apply for a forgivable loan under the Paycheck Protection Program.
The program was originally supposed to expire at the end of March, but President Joe Biden signed the extension into law this week.
The measure was passed in both chambers of Congress with bipartisan support. In the Senate, the vote was 92-7. The bill is officially called the PPP Extension Act of 2021.
The action will extend the deadline for the PPP from March 31. It gives the Small Business Administration 30 more days to process pending applications beyond the new May 31 deadline.
The PPP was established in spring of 2020 as part of the first economic relief package that sought to rescue the American economy during the coronavirus pandemic.
These loans, which are backed by the government through the SBA, are designed to help businesses maintain their payroll at pre-pandemic levels. If they do so, they can apply to have their loan forgiven, converting it into a grant instead.
Since the program was first passed as part of the CARES Act that totaled $2.2 trillion, more than $806 billion has been approved for the PPP.
In 2021, through March 7, the program has resulted in 2.4 million in approved loans that total roughly $165 billion. That’s a little more than 50% of the $284 billion that was allocated to the PPP when the program started back up again this January.
Over four months in 2020, the PPP gave out roughly 5.2 million loans worth roughly $525 billion. The SBA estimated that those loans saved roughly 50 million jobs in the United States.
Some economic experts were concerned about the PPP’s original March 31 deadline. They believed an extension to the PPP was necessary since there have also been some recent changes to the program’s eligibility requirements.
The new rules to the program that the Biden administration announced in February gave small businesses with fewer than 20 employees an exclusive period of two weeks to apply for a PPP loan. During that time, larger companies were prohibited from applying for the program.
Part of the reasoning for this was to try to get money to the small businesses who have been hit the hardest during the pandemic.
The American Institute of Certified Public Accountants, for example, said Congress should extend the deadline by at least two months.
Other business groups want the federal government to go even further. The U.S. Chamber of Commerce, for one, said the PPP should be extended throughout all of 2021. Another group of more than 100 trade organizations asked Congress to extend the program through the end of June.
There is no longer an exclusive application window for certain-sized businesses. Any business with 500 or fewer employees can apply for a loan for the PPP for the first time. If your business has already received a PPP loan and has fewer than 300 employees, you can apply for a second loan through the program.
At least 60% of the money the business receives must be spent to maintain payroll if they want to receive full forgiveness of their loan. They have between eight and 24 weeks to spend the money.