UPDATE: March 8, 2021: The Federal Reserve Board is extending the Paycheck Protection Program (PPP) liquidity facility through June 30, the central bank said in one Press release Monday.
The program was infused with $ 284 billion before restarting on Jan. 11. As of February 28, according to information, around 128 billion US dollars had not been claimed Administrative data for small business.
The Fed and Finance Department extended in November the PPP facility by March 31st along with the Commercial Paper Funding Facility, the Money Market Mutual Fund Liquidity Facility, and the Primary Dealer Credit Facility. The other three facilities will expire on March 31, as planned, the Fed announced on Monday.
- The Small Business Administration (SBA) published new instructions wednesday Allow sole proprietorships independent contractors and the self-employed who use gross income instead of net income to calculate the amount of Paycheck Protection Program (PPP) funds they should receive.
- The changes come during one two week window in which the PPP portal – until March 9th – only accepts applications from companies with fewer than 20 employees. However, the portal should no longer accept applications March 31.
- The SBA approved nearly 2.2 million loans valued at $ 156.2 billion between the relaunch of PPP in January and February 28, according to the agency. That only makes more than half of that $ 284 billion a December invoice for the program. The new guidelines, combined with the prospect of leftover funds, have led some bankers to move PPP beyond March.
Wednesday’s final rule codified changes that annoyed the Biden administration last week when it announced it would give the smallest businesses exclusive access to the portal for two weeks.
Borrowers whose PPP loans have already been approved will not be able to increase their loan amounts under the new formula, the SBA said, adding that they could potentially screen first-time PPP borrowers who calculate their loan amounts with gross income greater than $ 150,000.
For one, Senator Ben Cardin said Tuesday he wanted bipartisan support for applicants to use the gross income formula to recalculate pre-existing PPP loans. Cardin, D-MD, plans to hold a hearing this month to discuss the formula debate, he said. However, there is little time for legislators to intervene.
Cardin said Tuesday he supported extending the PPP deadline – a prospect confirmed by a number of bankers.
“Let’s get the rules out, advocate enlargement and then lobby” for revised guidelines, Jill Castilla, President and CEO of Citizens Bank of Edmond, Oklahoma, said American banker. “As long as the crisis lasts, this program must continue.”
David Becker, chairman, president, and CEO of First Internet Bancorp in Indiana said it was “by far the smartest way to get borrowers to bolster their existing credit,” but it takes more time.
“If they extended it 30 to 45 days,” Becker told American Banker, “it would give everyone the opportunity to reach the companies that really need help.”
Matt Raker, executive director of Asheville, North Carolina-based community development financial institution Mountain BizWorks, said The Wall Street Journal Wednesday’s changes could double loan amounts for applicants without employees.
The new guidelines have changed the perspective of other potential applicants. Justin Burgess, a Dallas-based furniture maker and retailer, told the Journal he thought he wouldn’t apply for a second PPP loan. His first last year was $ 3,000.
“It was just a minor thing,” Burgess told the publication. “It was a lot of work for very little return.” He called the new formula “much more beneficial” and added that he plans to apply for a second loan.
Don’t wait until the deadline
However, the head of a trade group would advise applicants not to wait until the last minute.
Tony Wilkinson, executive director of the National Association of Government Guarantee Lenders, told the Journal that he had heard that some lenders were planning to stop accepting applications before March 31 to allow time to process.
A loan can take up to 10 days to process “depending on the codes thrown at us,” Nimi Natan, president and CEO of Gulf Coast Small Business Lending, told American Banker. “I would hate it if I stopped accepting applications on March 25th.”
An early cutoff would not be unprecedented. Some lenders in last year’s Main Street program has stopped accepting applications December 14th before the expected end of the program on December 31st.
“We could be more relaxed, make fewer mistakes, spend more time making sure the documentation is in place, and work through everything [error] Codes “when the deadline was extended, said Natan.