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House Votes to Extend Paycheck Protection Program


With the program set to expire in two weeks and lawmakers citing delays in processing existing applications, the House of Representatives approved legislation to extend it further. 

Approved March 16 by an overwhelming vote of 415-3, the Paycheck Protection Program Extension Act of 2021 (H.R. 1799) would extend the application deadline an additional two months, until May 31, 2021. H.R. 1799 also provides an additional 30 days for the U.S. Small Business Administration to review, process and approve loan applications submitted by the May 31 deadline. 

Introduced March 11, the House bill was sponsored by Reps. Carolyn Bourdeaux (D-GA), Young Kim (R-CA), Nydia Velázquez (D-NY), chair of the House Small Business Committee, and Blaine Luetkemeyer (R-MO), ranking Republican on the committee. Companion legislation was introduced in the Senate by Sen. Ben Cardin (D-MD), along with Sens. Susan Collins (R-ME) and Jeanne Shaheen (D-NH).

“We heard last week that some participating lenders have begun to wind down their PPP operations in advance of [March 31] deadline, limiting the relief options available to entrepreneurs at a time when many still need help,” Rep. Velázquez stated during debate on the bill. “But I must stress that far too many small businesses, especially the smallest of the small, remain in desperate need for relief. This is simply not the time to let this valuable program expire, especially as thousands of timely loan applications are still sitting in SBA’s queue,” Velázquez further emphasized. 

The Consolidated Appropriations Act, 2021 enacted in December 2020 reopened and extended the PPP through March 31, and allocated another $284 billion for first- and second-round forgivable loans, including dedicated set-asides for small businesses and lending through community-based lenders, as well as expanding PPP eligibility for 501(c)(6) nonprofits.

Additionally, the Biden administration in a Feb. 22 announcement implemented a two-week period, during which only businesses with fewer than 20 employees could apply for relief through the program, which apparently caused some confusion and processing delays. 

Luetkemeyer notes that PPP loans are currently facing lengthy delays as error codes force multiple back-and-forth conversations between small businesses, lenders and the SBA, which is creating uncertainty as to how the loans will proceed. And with the program set to expire in two weeks, the SBA is reporting that the end date will prevent all loans that are currently in the pipeline from being processed. “Under no circumstances should an American small business that applied for a PPP loan have their loan discarded due to a bureaucratic technical delay at the SBA. Simply put, if they completed their PPP paperwork on time, their loans should be considered,” says Luetkemeyer.    

Since the PPP was enacted under the CARES Act in March 2020, more than 7.5 million loans have been approved totaling more than $687 billion. The latest data for 2021 shows that 2.4 million PPP loans have been approved totaling approximately $165 billion.

As a reminder, employer contributions to both defined contribution plans and defined benefit plans are included in the definition of payroll costs when calculating the maximum amount of a PPP loan. Furthermore, the $100,000 cap on compensation applies only to salary; the cap does not apply to employer contributions to DC and DB plans. See October 2020 and March 2021 IRS FAQs on PPP Loan Forgiveness for additional details. 

While the timing is not clear, it is expected that the Senate will take up and approve the legislation.