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Banks and other businesses are pressing the Biden administration and Congress to keep the government's largest small business aid program running beyond its March 31 expiration date, warning that struggling employers need more time to obtain the economic lifeline.
Banks responsible for doling out billions of dollars in loans under the Paycheck Protection Program are already beginning to close down their application portals early so they can process requests and ensure they can clear new government fraud checks. Bank of America, the No. 2 PPP lender by dollar volume, planned to stop taking applications on Tuesday so it can help customers meet the deadline.
The crunch comes just days after the Biden administration unveiled new rules designed to help self-employed businesses gain access to the program and qualify for more aid. Some lenders say they don't have enough time to implement the rules, given the looming expiration and their application backlog. JPMorgan Chase, the country's largest bank, told potential borrowers on Monday they would need to apply with another lender if they wanted to take advantage of the new benefits for sole proprietors.
The concerns have gone unaddressed by Biden administration officials and lawmakers who have been focused on Democrats' $1.9 trillion relief bill, which includes another $7 billion for the PPP but wouldn't extend the program. Members of Congress are just beginning work on a potential extension, but with some $120 billion in PPP funding left, it's no sure bet that they'll move quickly to address the issue, fueling a sense of confusion among lenders responsible for issuing the aid.
"They don't have any answers," Consumer Bankers Association general counsel David Pommerehn said. "They're preparing for the worst-case scenario, and that is the program shuts down completely on March 31 at 11:59."
The uncertainty marks the latest drama around the massive Covid-19 relief program, which has provided nearly 7.6 million loans to employers since its creation in March 2020. The loans are popular because they can be forgiven if employers agree to keep paying employees. But since its inception, PPP has been a roller coaster for borrowers and lenders alike because of ever-changing rules and shifting deadlines.
On Tuesday, President Joe Biden and White House officials took a victory lap on recent changes they've made to help ensure the smallest businesses have access to the PPP, with the president visiting a Washington hardware store that received aid.
But the White House messaging — including a comment by a top National Economic Council official that there is plenty of time left to apply — didn't capture the reality that PPP lenders are pulling back and not universally adopting rules Biden pledged to help more tiny businesses get funds.
Rachel Ball, a sole proprietor who owns a corporate events business, was one of the Chase PPP applicants notified Monday afternoon that the bank would not adopt the new rules that would allow businesses like hers to qualify for more money. Ball, who uses Chase for her business banking, now faces a choice between taking a gamble on a different lender with the clock ticking or settling for a smaller loan under the old rules.
"I feel like I'm in limbo," Ball said.
Chase spokesperson Anne Pace said the bank supports calls for a PPP extension and that it would implement Biden's changes if an extension went through. Pace said each application can take weeks to get through approval and funding stages and that the bank is focused on the high volume of applications in its pipeline before the end of the month.
Chase's comments echo those of bank trade associations that are urging Congress and the Small Business Administration, which runs the PPP, to find a way to let them continue processing applications after March 31.
Banks have warned that the SBA's decision to strengthen anti-fraud measures this year has introduced new delays in the application pipeline because of the time it takes to resolve concerns flagged by the agency after it reviews loan requests. Bank of America, which will stop taking applications Tuesday, said it has 30,000 in process and wants to allow enough time to get each through the SBA by March 31.
In a March 5 letter to lawmakers, the American Bankers Association and other lender groups said they had "serious concerns" about how many PPP loans held up in the SBA's application system will remain unresolved through March 31. The lenders said they also had concerns that new loans submitted to the SBA this month will be left outstanding when the SBA system shuts down.
The National Association of Government Guaranteed Lenders is proposing that Congress create a "dual deadline" that would require applications to be submitted by April 30 and then approved by May 31, with the final month being used to clear issues holding up loans.
The Bank Policy Institute and the Consumer Bankers Association, which represent major PPP lenders, are asking the SBA to allow loan applications that have triggered error messages and "hold codes" to continue to be processed to completion by banks and the SBA at least until June 30. The agency could implement the proposal by granting "conditional" approval and committing funds for applications that come in before March 31.
"Doing so would assist thousands of eligible borrowers whose applications are or will be subject to administrative delays through no fault of their own," the two groups said in a March 3 letter to the SBA.
"[I]n our members’ experience, many of the smallest borrowers, and thus those generally most in need of PPP loans, are generally subject to a greater number of SBA holds than larger borrowers," they wrote. "As such, smaller borrowers, which the Administration and the SBA have identified as needing greater and more streamlined access to funds, may be most at risk of losing access to funds."
The SBA and Congress are beginning to signal that they will work on a fix.
A SBA spokesperson said the agency hasn't decided whether it can continue to process a pending application once the March 31 deadline for approvals has passed. Patrick Kelley, associate administrator in the SBA's Office of Capital Access, which runs the PPP, told small businesses on a webinar Monday that the agency is working on an "administrative solution" to allow PPP applicants to receive funds after the program expires. With the issue unresolved, his advice to businesses was "do not wait" to apply.
Lawmakers are starting to throw support behind a PPP extension. House Small Business Chair Nydia Velázquez (D-N.Y.) is seeking a three-month renewal. Sen. Jeanne Shaheen (D-N.H.), a member of the Senate Small Business Committee, said "extending the deadline for the PPP is a common-sense step that we can and must take.”
“Small businesses are still feeling the effects of the pandemic and there is strong demand for the PPP program," Velázquez told POLITICO. "With PPP set to expire at the end of the month, I am working diligently with leaders in the Senate and administration to come to an agreement on extending PPP in a way that meets the needs of small business owners.”
It's unclear how House and Senate leadership will proceed. Spokespeople for House Speaker Nancy Pelosi and Senate Majority Leader Chuck Schumer did not respond to questions about whether they too would support continuing the PPP.
A White House official who declined to be named said if Congress wants to push back the PPP deadline "we are open to discussing a path forward with them."
"Right now, we’re focused on delivering relief dollars quickly and equitably in the time we have left," the White House official said, adding that the administration is also focused on passing Biden's aid bill, which includes relief for small businesses.
Some Republican lawmakers are willing to work on an extension of the program, according to aides and lobbyists. Business groups are trying to frame the issue as a bipartisan victory after the huge party-line fight over Biden's relief bill.
“What better way to reach out to Republicans who are feeling burned by promises of bipartisanship than leaning into small business relief?” said Matthew Haller, head lobbyist at the International Franchise Association.
Rep. Chip Roy (R-Texas), who led work on legislation last year to retool an earlier iteration of the PPP, would support an extension, a spokesperson said. Rep. Blaine Luetkemeyer (R-Mo.), the top Republican on the House Small Business Committee, said in a statement that the PPP "has assisted millions of small businesses since its inception, and as vaccines become more widely available and states begin to open up, we must responsibly examine the program’s future."