PPP Loan Application Deadline Extended with New 2021 Law
On March 31, 2021, President Joe Biden signed into law the PPP Extension Act of 2021, which adjusts the deadline for first- and second-draw Paycheck Protection Program (PPP) loan applications. The critical change made by the legislation should help even more small businesses access funding as the coronavirus pandemic nears its end. Here’s what employers need to know about the updates.
Background: What is the Paycheck Protection Program (PPP)?
The Paycheck Protection Program (PPP) is a federal loan program designed to help smaller employers impacted by the COVID-19 pandemic. It’s administered by the Small Business Administration (SBA) and was initially launched as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act.
Beginning in spring 2020, the PPP has distributed hundreds of billions of dollars in loans to help American companies remain in operation during the pandemic. As part of the program, borrowers can be eligible for full loan forgiveness if the funds are used on certain payroll costs, business mortgage interest payments, rent, and other criteria.
What is the PPP Extension Act of 2021?
The PPP Extension Act of 2021 is a new piece of legislation passed by Congress and signed into law by President Biden that extended the deadline for PPP loan applications from March 31, 2021, to May 31, 2021. The program now officially runs through June 30, 2021.
Likewise, the bill notes that for the final 30 days of the program (June 1 through June 30), the SBA is only permitted to process PPP loan applications submitted prior to June 1. It won’t accept any new loan applications during this period. (unless another extension is signed into law).
How Will Extending the PPP Loan Application Deadline Impact Small Businesses?
This extension gives small businesses more time and flexibility to apply for the funding that many so desperately need. According to reporting from CNBC, the SBA noted that at the end of March 2021, approximately $79 billion in funding remained in the program.
Additionally, the two-month extension gives smaller employers extra time to apply for second-draw PPP loans if needed. Organizations can only qualify for second-draw PPP loans if they’ve already used the full amount allotted in the first-draw PPP loan (in addition to two other qualifications).
For example, an employer may have received a first-draw PPP loan at the end of January 2021 and exhausted the funds sometime in March 2021. If the organization still needs additional loan dollars, the extension makes it more likely that it can qualify for another round of funding.
What Else Should Organizations Know About the PPP Deadline Extension?
Only qualified employers are permitted to apply for first- and second-draw PPP loans. To learn more about which organizations qualify for funding—plus additional information about PPP loan forgiveness—review the BerniePortal HR Glossary breakdown that details all the ins and outs of the program.
Additionally, the PPP application deadline has been extended several times since the program’s launch in early spring 2020. With this in mind, it’s difficult to say whether or not there will be another application extension or if the pool of funds will be replenished again. Employers that need PPP funding should apply as soon as possible by contacting an approved lender using the SBA’s Lender Match tool.
Update: SBA Launches PPP Loan Forgiveness Portal
The SBA Loan Forgiveness Portal was launched on Aug 24, 2021 to streamline the loan forgiveness process. Eligible borrowers with loans less than $150,000 can request forgiveness directly from the SBA. Prior to the Loan Forgiveness Portal, borrowers would have to submit documentation to lenders, but many lenders have already opted out of the new portal process including Bank of America, JBPMorgan Chase, and PNC.
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