Biden administration extends deadlines for signature PPP, EIDL loan programs
April 5-11, 2021
By Daily Record Staff
The U.S. Small Business Administration has extended the deadlines and benefits for its two keystone COVID-19 relief programs and recently launched a new website to provide loan support for small businesses that operate live public venues impacted by the pandemic.
On May 30, President Joe Biden signed the bipartisan PPP Extension Act of 2021 that extends the popular Paycheck Protection Program an additional two months to May 31, 2021, and then provides another additional 30-day period for the SBA to process applications that are still pending.
“Today, President Biden sent another strong message to America’s more than 30 million small business owners negatively impacted by the pandemic: help is here,” said Administrator Isabella Casillas Guzman, who was confirmed by the U.S. Senate on March 16. “By signing the PPP Extension Act of 2021 and the American Rescue Plan Act into law, the President is providing additional critical relief to the smallest of the small businesses – the mom-and-pop shops that line our Main Streets and keep our local and regional economies going.”
Under President Biden and former President Donald Trump, more than 8.2 million PPP loans have been approved totaling since COVID-19 was declared a global pandemic more than a year ago. Under President Biden and the Consolidated Appropriations Act approved by Congress on Dec. 27, which was signed by Trump, the SBA has streamlined the PPP fund.
Under the new PPP2 rules approved just after Christmas, Congress allocated another $325 million in targeted aid to small business owners, including an additional $284 billion for PPP (PPP) loans and $20 billion for EIDL grants through the SBA offices in all 50 states. However, the revised program only allows businesses with fewer than 300 employees and at least a 25% reduction in revenues in at least one quarter in 2020 to gain access to up to $2 million in forgivable loans, down significantly from the earlier 500-employee baseline and $10 million maximum loans in the CARES Act.
The new legislation also makes publicly traded companies ineligible to receive the new PPP loans while also excluding businesses involved in lobbying activities or those tied to Chinese firms with at least a 20% ownership stake. The SBA also received an additional $50 million to audit and mitigate fraud in PPP and EIDL programs.
In response to criticism that the earlier PPP and EIDL loans under the CARES Act left out black and minority-owned businesses, that relief package also includes $12 billion in appropriations that will go to Minority Depository Institutions and Community Development Financial Institutions that underserved firms. Another $20 billion will also fund direct SBA grants to companies in low-income communities.
Biden’s $1.9 trillion American Rescue Plan signed into law on March 11 will provide the SBA an additional $15 billion as it begins the wind down the popular forgivable loan program that officially started on March 27, 2020. Under the $2.2 trillion CARES Act, the PPP’s much-ballyhooed launch was large tarnished by Wall Street and publicly traded gaming the system to receive billions in loans intended for true small business owners, sole proprietors, minority and venture-owned firms, and other underserved companies without access to capital and traditional bank loans.
Shuttered Venue loan portal opens on April 8
The Biden administration has also been tabbed to administer the SBA’s new Shuttered Venue Operators Grant (SVOG) which was also part of the appropriations bill approved by Congress at the end of last year. The SBA recently launched a dedicated webpage for the SVOG that begins accepting applications for the much-anticipated critical economic relief program on April 8, 2021.
That $15 billion grant program will provide emergency loans to support shuttered live music and entertainment venues, theaters, museums, and zoos that have experienced significant revenue losses. Since becoming law, it has taken the SBA nearly three months to write regulations for the new pandemic relief program.
The American Rescue Plan Act, signed into law by President Joe Biden on March 11, appropriated an additional $1.25 billion for the program, bringing total funding to $16.25 billion. SBA officials said nearly more than $16 billion will be directly allocated for grants.
“Help is here for venue operators hit hard by the COVID-19 pandemic. The SBA has worked diligently to build the Shuttered Venue Operators Grant program from the ground up to assist and address the diverse eligibility requirements of each type of applicant and we will open for applications on April 8,” said Guzman. “The SBA knows these venues are critical to America’s economy and understands how hard they’ve been impacted, as they were among the first to shutter. This vital economic aid will provide a much-needed lifeline for live venues, museums, movie theatres, and many more.”
To ensure eligible venues do not miss a window to receive assistance through the PPP, the Biden Administration also amended the SVOG program rules for participants in the SBA’s main COVID-19 loan program. Under the new SVOG rules, businesses that apply for a PPP loan after Dec. 27, 2020, can also apply for a with the eligible entity’s SVOG to be reduced by the PPP loan amount. The last date to submit a PPP loan application and get an SBA loan number is currently Wednesday, March 31.
As the SBA builds and prepares to open the program, the dedicated SBA website includes frequently asked questions, video tutorials, and other SVOG details. To prepare in advance of the SVOG application portal opening on April 8, potential applicants should get registered in the federal government’s System for Award Management (SAM.gov), as this is required for an entity to receive an SVOG and reference the preliminary application checklist and eligibility requirements.
Separately, the SBA has also extended deferment periods for all disaster loans through 2022, including the COVID-19 Economic Injury Disaster Loan (EIDL) program. All SBA disaster loans made in the calendar year 2020, including COVID-19 EIDL, will have the first payment due date extended from 12-months to 24-months from the date of the note.
COVID-19 EIDL loans are offered at very affordable terms, with a 3.75% interest rate for small businesses and 2.75% interest rate for nonprofit organizations, a 30-year maturity. Interest continues to accrue during the deferment period and borrowers may make full or partial payments if they choose.
Through the new extensions, SBA disaster loans made in the calendar year 2021, including COVID-19 EIDL, will have the first payment due date lengthened from 12-months to 18-months from the date of the note. Existing EIDL loans approved prior to March 1, 2020, also received an automatic deferment of principal and interest payments through December 31, 2020, and subsequently extended through March 31, 2021.
The Biden administration has now provided an additional 12-month deferment of principal and interest payments will be automatically granted to these borrowers. Borrowers will resume their regular payment schedule with the payment immediately preceding March 31, 2022, unless the borrower voluntarily continues to make payments while on deferment.
According to SBA officials, the COVID-19 EIDL program has assisted over 3.7 million small businesses, including non-profit organizations, sole proprietors, and independent contractors from a wide array of industries and business sectors. SBA said it also continues to strive to make available all previously approved stimulus funding under the Trump administration.
In mid-February 2021, SBA said it had reached a milestone in the success of the COVID-19 EIDL program, by approving over $200 billion in emergency funding in low-interest loans, providing working capital funds to small businesses, nonprofits, and agricultural businesses to survive the severe impacts of this catastrophic and historic period within the entire United States of America and its territories. SBA says it continues to approve over $500 million each week for the COVID-19 EIDL program.