A small business owner in Chinatown, San Francisco
Source: CNBC
The time is approaching for the smallest companies to access the priority application period for the Small Business Administration Wage Protection Program.
But these firms, along with small businesses of all sizes, will still be able to apply for forgivable loans outside the priority window.
The 14-day priority window announced by the Biden-Harris administration last month ends at 17:00 ET today, March 9th. In these two weeks, only companies with less than 20 employees could apply for forgivable loans through PPPs, a special period aimed at helping women and minority-owned businesses access funds.
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Even after this window closes, it will still be possible for these companies to apply for and receive funding through the program. Although it could compete with larger firms for money, lenders do not expect the program to run out of money before the March 31 expiration date.
This year, as of March 7, the SBA has approved more than 2.4 million PPP loans totaling nearly $ 165 billion. This represents about 58% of the $ 284 billion allocated to the program when it reopened in January.
“We may be over $ 200 billion, but I think there will probably be between $ 50 billion and $ 75 billion left,” said Sam Sidhu, chief operating officer of Phoenix-Pennsylvania-based Customers Bank.
Smaller businesses can still apply
This is important for the smallest businesses that wanted to take advantage of the priority application window, but delayed the submission of documents.
For example, while the special application period opened on February 24, the extension of eligibility for those who faced student loan debts, had convictions without offenses, or were non-citizen business owners did not entered into force only in the first week of March, causing confusion for some. An updated loan calculation formula that meant more money for companies with a C IRS Form 1040 was not announced by the SBA until March 3.
Beyond that, the administration was not prepared to process forms with the new calculation formula until March 5, leaving sole proprietors with little time to access the priority application period.
But these companies can still apply before the program deadline, Sidhu said, and they should not believe that because they missed the priority window, they will not receive a loan.
Be aware of the deadline
The March 31 expiration date of the entire program is worrying for many creditors.
“The March 31 deadline is a much bigger issue,” said Chris Hurn, chief executive of Fountainhead Commercial Capital, a non-bank lender. He added that he worries that the date is not enough time for all small businesses to take advantage of the new rules or ask for additional rounds of financing, which could be crucial for their survival.
In addition, lenders are also under pressure to process everyone’s loans as quickly as possible, which has been difficult with the change of rules.
“Everyone’s bandwidth has been stretched tremendously in the last year with this program,” Hurn said.
So far, the Biden administration has not signaled that the program will be extended, a move that should be approved by Congress.
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