Businesses Have Until May 31, 2021, To Apply For SBA’s PPP Loan
Well, it’s official. The Paycheck Protection Program (PPP) loan application deadline has received another last-minute extension and employers now have until May 31, 2021, to apply for the federal financial relief of a PPP loan. Additionally, the PPP Extension Act of 2021 (H.R.1799) grants the Small Business Administration (SBA) some extra time to process any applications that come in last-minute.
The PPP loan program, which was approved by the House of Representatives on March 16, 2021; the U.S. Senate on March 25, 2021; and was finally signed into law by the president on March 30, 2021, was set to expire on March 31, 2021. However, the new legislation moved the deadline to apply up to the end of May, giving employers 60 extra days to submit their applications. The final 30-day period noted in the pages of the PPP Extension Act of 2021 (June 1-June 30, 2021), also grants the SBA extra time to process any applications submitted prior to June 1.
Why Another Extension?
First, the SBA’s new checks and balances that are applied to second draw loan requests slowed the disbursement of funds. To receive approval of a PPP 2.0 loan, employers are required to meet the 25 percent quarterly gross receipts reduction requirement. The SBA noted that the 25 percent gross receipts reduction is de facto evidence of necessity.
Also, many newly eligible borrowers did not receive appropriate guidance from the SBA on how to apply the rules when making their application until the March 31, 2021 deadline became imminent. The additional 60 days to apply for a PPP loan is a crucial measure to help ensure that the earmarked funds can reach the program’s intended recipients.
Notwithstanding the fact that the PPP Extension Act does not provide any further funding for the PPP beyond the funding already provided in the CAA and ARPA, it does provide access to the about $80 billion that has not yet been disbursed.
The PPP was originally created as part of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) on March 27, 2020, and was originally designed to help small businesses pay wages during the coronavirus pandemic with loans that would be paid off tax-free by the federal government provided the borrower could prove that the funds were spent on eligible expenses during the specified time. Subsequent legislation, the Consolidated Appropriations Act, 2021, which included $284 billion additional funding, and the American Rescue Plan Act of 2021 (ARPA), which included $7.25 billion additional funding, expanded the forgivable expenses that borrowers can pay with the funds, made more employers eligible borrowers and created a second draw of PPP loan funds that is more targeted to very small companies with decreased revenue.
Need Help Applying For A PPP Loan?
If you are still interested in applying for the original PPP loan or the second draw PPP loan and are in need of assistance, reach out to a member of Rea’s CARES Act & PPP Task Force. Our knowledgeable business consultants and financial experts have helped countless employers obtain the financial assistance they need to stay afloat.