President Biden on Tuesday signed into law a two-month extension of the Paycheck Protection Program one day before the coronavirus relief fund was poised to expire, giving small businesses until May 31 to apply for a forgivable loan.
Senators voted 92 to 7 to pass the PPP Extension Act of 2021 last week, extending the program's deadline from March 31 and giving the Small Business Administration (SBA) an additional 30 days after that to process pending applications. The House of Representatives also passed the measure on a bipartisan basis.
Congress established the program, which provides government-backed grants to small businesses if they maintain their payroll, one year ago with the passage of the $2.2 trillion CARES Act. In total, lawmakers have approved about $806 billion in funding for the program.
This year through March 7, the PPP has approved 2.4 million loans worth about $165 billion, just over half of the $284 billion allocated to the program when it reopened in January. By comparison, the program distributed about $525 billion in forgivable loans to 5.2 million companies over the course of roughly four months in 2020, saving an estimated 50 million jobs, according to the SBA.
With the program's recent changes to eligibility, however, some experts worried there wasn't enough time to help small businesses that still need to access the fund. In a statement earlier this month, the American Institute of Certified Public Accountants called the March 31 deadline "unrealistic" and urged Congress to extend it by at least 60 days.
Others, including the U.S. Chamber of Commerce, have suggested the program should be extended through the entire year. A group of more than 100 trade organizations called on Congress to extend the program until at least June 30.
Under the new rules announced by the Biden administration at the end of February, businesses with fewer than 20 employees received an exclusive two-week period to apply for loans. Bigger companies were shut out of the program during that time frame, part of an effort to ensure the hardest-hit businesses can receive the aid they need.
The original eligibility criteria resumed in mid-March; any business with fewer than 500 employees can apply for a first-time loan, and any business that already received a PPP loan can apply for a second if it employs fewer than 300 workers
Businesses can choose to spend the funds over any period of time between eight and 24 weeks. At least 60% of the money must be spent on maintaining payroll in order to receive full forgiveness.
The interest rate is still 1%.