With the remaining 40% of the funds allocated by Congress in December, lawmakers approved it another $ 7 billion
for the $ 1.9 trillion Covid aid bill he signed the law last week.
But the additional funds are of little use if the March 31 deadline is not withdrawn.
There is bipartisan support for legislation that would extend the program until May 31 and provide an additional 30-day period for the Small Business Administration to process applications that are still pending. A House bill could be voted on as early as Tuesday evening, but the Senate will still have to pass additional legislation.
There are several reasons why so much money remains. Demand has slowed as the economy slowly recovers, but lenders say a new fraud detection process has left thousands of applications for weeks. In addition, the exclusivity windows prevented some larger companies from being able to apply for certain periods during the eight weeks. the program has been open since the beginning of this year.
Changes in rules
Congress has made changes aimed at ensuring that the most affected companies have access to the money instead of the chain stores and restaurants that quickly got big loans when the program opened last year.
When lawmakers reopened access to the program in December, billions of dollars were wiped out for community development financial institutions, which tend to lend to minority-owned businesses in underserved communities and companies with fewer of ten employees.
He The Biden administration made even more sudden changes
in February. Three days in advance, it allowed small businesses with fewer than 20 employees to have an exclusive two-week window to apply for funding, blocking larger employers during that time. It also expanded eligibility. Self-employed workers, homeowners and independent contractors can now opt for more money, as can business owners with non-fraud-related crimes, those who die from their federal student loans and some non-citizen residents.
But somehow, changes in the second round of lending have also made eligibility more restrictive. Companies must show at least a 25% drop in gross revenue in the first, second or third quarter of this year compared to the same quarter in 2019. Those who employ more than 300 workers are excluded. .
According to Hilda Kennedy, who spoke at a hearing in the House last week on behalf of the National Association of Development Businesses, a trade group representing small business, there are still issues with error messages and retentions and it is difficult to receive a call or email. lenders.
Who has been helped
Last year, the program approved 7.6 million loans worth more than $ 687 billion between April and August. Since it reopened in January for new first-time applicants and for second-time loans, nearly 2.4 million loans have been made
on March 7, with a total of about $ 165 billion.
Loans are taken into account if the company spends at least 60% of the money on payroll expenses, although homeowners must apply for cancellation. About 3 million have yet to file an apology.
Companies continue to have problems
Advocates and small business lenders say the program provides vital assistance to struggling businesses and are asking Congress to extend the deadline. Second, the number of small start-ups in the United States continues to fall by 32% since January 2020 Opportunity statistics
, a Harvard research group that tracks recovery.
“The current timeline for accessing the PPP program is too truncated and makes no sense given the state of economic recovery,” the National Federation of Independent Businesses wrote in a letter to lawmakers.
The group noted that several small businesses are still assessing their needs in light of changing circumstances. Some business owners
they say loans have only provided a loophole in what has now become a one-year pandemic. Each loan is only intended to cover expenses of a few months.
CNN’s Jeanne Sahadi contributed the information.