Biden Administration Extends Small Business Loan Program

President Joe Biden has extended the period that small businesses have to seek loans to offset costs related to the COVID-19 pandemic. According to Bloomberg, Biden signed the legislation in a short ceremony on Tuesday (March 30), calling it a bipartisan effort that gives businesses two additional months — from March 31 to May 1 — to apply for the Paycheck Protection Program (PPP).

The legislation also gives the Small Business Administration (SBA) another 30 days to process loans, so as to alleviate the longer wait times that developed when the government instituted stricter screening to avoid fraud.

According to PYMNTS’ Main Street Business Survivor Study from earlier this year, these restrictions initially only accepted applications from businesses that could show they had suffered at least a 25 percent reduction in revenue, leading to a large drop in applications.

The PPP, which was established last year under President Donald Trump, has so far given out more than 8.7 million loans to small businesses at the cost of more than $734 billion. The loans are fee-free and federally backed. Expenses related to payroll, rent and other operations can be forgiven, which means many of these loans will become federal grants.

According to Bloomberg, the Biden administration altered the program earlier this year, offering a two-week application period just for businesses with under 20 employees and a new calculation formula for businesses run by sole proprietors, both changes designed to help companies that struggled when the PPP was first launched.

The new legislation comes just a few days after the SBA announced it would be giving business owners substantially more COVID relief. Starting April 6, small businesses will be able to apply for up to two years of business relief for a maximum of $500,000. Prior to this change, loans were for six months and limited to $150,000.

“More than 3.7 million businesses employing more than 20 million people have found financial relief through SBA’s Economic Injury Disaster Loans, which provide low-interest emergency working capital to help save their businesses,” SBA Administrator Isabella Casillas Guzman said in a statement. “However, the pandemic has lasted longer than expected, and they need larger loans.”