Despite dire needs of small businesses, $ 128 billion in P3s to expire on March 31

With around $ 128 billion currently up for grabs, the Paycheque Protection Program will go to bed at the end of this month – and, as of now, there are no plans to revive him.

Neither the House nor the Senate versions of the latest $ 1.9 trillion stimulus package – dubbed the American Rescue Plan Act, which is expected to reach the president’s office by March 14, includes an extension of the PPP. However, lawmakers are allocating an additional $ 7.25 billion in funding for the program, which restarted in mid-January with $ 284.5 billion. Lawmakers also intend to open it up to larger nonprofits.

the forgivable loan program, which has helped more than 7.3 million businesses access more than $ 679 billion in aid, much of it is expected to end with the remaining money. However, business groups and the owners themselves say it takes longer to help those who have so far been unable to access the offer.

Highlighting disturbing data from an August survey – showing levels of concern still high among U.S. businesses – a coalition of business groups led by the U.S. Chamber of Commerce sent a letter to legislators this week, urging them to extend the PPP until December 31, 2021. “Small businesses continue to struggle, especially minority-owned businesses,” the business leaders wrote. “Extending the PPP deadline until the end of this year will ensure that the small business segment facing the biggest hurdles is not left behind.”

In other words, it is always necessary. While the first round of PPP, which stood at $ 349 billion, was used up in about two weeks, with banks routinely prioritizing their existing and larger customers, this latest round has been marked by delays.

If the second-draw PPP borrowers were not categorically rejected by mistake for one reason or another, widespread delays have affected legions of other borrowers. Up to a third of the second-draw applicants received requests for additional information, after the Small Business Administration’s automated PPP system increasingly returned error codes from everything from discordant data to turn to wrong information, as they were told, wrongly, that they had criminal records. According to the American Institute of CPAs (AICPA), up to 40 different potential error codes result in additional validation checks, which can delay loan approval for weeks. The lenders finally received tools to solve these problems, but the delays continue to be a source of consternation among business owners.

Biden’s own request on February 22 that the SBA rework its lending formula for individual entrepreneurs – allowing them to apply for loans with their gross income relative to their net income, which removes taxes and other expenses – also helped to delays. Advice on how to process loans under the new formula, along with updated requests, was not available to stakeholders until late in the day on March 3.

“Many PPP lenders have stated that they need at least a week to update their systems for these guidelines before accepting new applications,” said Barry Melancon, president and CEO of the AICPA, in a statement Friday. “This gives small businesses less than two weeks to submit a complete and accurate application.” He further urged lawmakers to extend the PPP for at least 60 days – if not through this pending stimulus bill, at least as a stand-alone measure. “The March 31 deadline just doesn’t make sense.”

Even the Biden administration’s exclusive 14-day application window – intended to help lenders focus their efforts only on companies with fewer than 20 employees – is rejecting applications. Eligible companies with more than 20 employees cannot apply until the program reopens on March 10.

Plus, borrowers are still showing strong interest despite slow loan approvals, says Mike Trabold, director of compliance risk at Paychex, who notes that the program is reaching smaller and smaller borrowers and that’s why the pace seems slow. “Because small businesses are [getting] the undivided attention of the entire lending community, ”he says,“ the presumption is that this will help people overcome bureaucracy at lending. And a lot of the bottlenecks in the process with the banks – hopefully – will go away. “

Of course, the PPP had to end at some point. And indeed, some financial experts suggest that lawmakers would do well to focus their attention on different forms of help which may be better suited to help growing businesses, especially as the economy shows continued signs of improvement.

“My position might not be popular,” said Ami Kassar, founder and CEO of MultiFunding, a small business loan consultant in Ambler, Pa., In. a recent statement: “It’s time to put PPP to bed.” Good financing options still exist, he said, in the SBA’s long-standing business aid offerings, such as the Economic Disaster Lending and Working Capital Lending Programs 7 ( a), which were reinforced during the pandemic.

“We need to create incentives for entrepreneurs to create and / or grow businesses,” Kassar said. “We need to make sure there are incentives to increase the payroll and ensure that businesses have access to capital to grow, hire and develop.”

Whether lawmakers think these efforts and an expansion of PPP are mutually exclusive remains a matter of debate. One thing is certain, if the program ends on March 31, many businesses will be left behind.

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