It is expected that President Biden will sign the PPP Extension Act of 2021 (“PPP”) passed by the House of Representatives on March 16, 2021, and the Senate on March 25, 2021. The bill extends the funding for the Paycheck Protection Program (“PPP”) Loan program through June 30, 2021, for First Draw and Second Draw Loan applications submitted by lenders to the SBA by May 31, 2021.
|Friday, May 28, 2021||
Last Business Day for lenders to submit applications for First and Second Draw PPP Loans
Monday, May 31, 2021, Memorial Day
|Last day that SBA will accept new lender applications for First and Second Draw PPP Loans|
Wednesday, June 30, 2021
|Last day for SBA to process lender applications for First and Second Draw PPP Loans submitted by May 31, 2021|
1. SBA Backlog
The extension is good news for small businesses, particularly considering the backlog of lender applications sitting at the SBA and the volume of applications that have not been processed because of technical difficulties (i.e. SBA error messages).
If your loan is one with a technical difficulty, you should work with your lender now to get it cleared up, as you do not want to be dealing with those issues in May.
2. May 28 Might Be The Real Deadline
It is unfortunate that no one looked at the calendar when the bill was being drafted to see that May 31 is Memorial Day. So this is not really a two-month extension since borrowers will need to make sure their applications are in by Friday, May 28, before the start of the long Memorial Day holiday weekend.
3. Opportunity for New First Draw PPP Loan Borrowers
The extension should be of particular benefit to First Draw PPP Loan borrowers who received their loans in 2021. This may give you enough time to use up those proceeds and apply for a Second Draw PPP Loan before May 28.
4. $50 Million in Remaining PPP Loan Funds
Last reports indicate that there is approximately $50 billion left in the PPP Loan program.
5. Possible New Rules to Come
We expect to see some further revisions to the PPP Loan program in the coming weeks, including provisions that would allow sole proprietors, independent contracts and self-employed individuals who had previously applied for First Draw PPP Loans under SBA rules in effect prior to March 3, 2021, to take advantage of the new SBA rules for sole proprietors that went into effect on March 3, 2021. These rules permit sole proprietors, independent contractors and self-employed individuals to obtain PPP Loan proceeds based upon their gross income, instead of their net income, increasing the loan amount available to these borrowers considerably. To date, there has not been a way for borrowers who received loans prior to March 3, 2021, to increase the amount of their loans under the new rules.