You now have until May 31st to apply for a PPP loan
Businesses have two more months to get applications in for First and Second Draw PPP loans.
Congress extended the application deadline for the Paycheck Protection Program (PPP) to May 31st on Thursday when it passed The PPP Extension Act of 2021. Previously, the coronavirus assistance program for small businesses was set to expire on March 31st.
The PPP offers funding to small businesses based on monthly payroll costs, with the potential of up to 100% forgiveness depending on how it spends the funds. Here’s what an extended deadline means for your small business.
Self-employed borrowers get another chance
The Biden Administration made several changes to the PPP, including a new loan amount formula for self-employed borrowers based on gross income instead of net revenue.
While it helped some borrowers qualify for more money, it also caused some confusion and made it difficult to get a loan at all. But now self-employed borrowers and gig workers have a chance to apply for a PPP loan if they weren’t able to get applications in by the deadline.
More second draw loans
Businesses that just received their first PPP loan might have time to apply for a Second Draw PPP loan. To get a second round of PPP funding, your business must have seen a 25% drop in revenue compared to 2019 and not have any more than 300 employees.
Your business must also fully spend the funds before you receive the Second Draw loan — though you don’t have to spend the funds before you apply.
Applications could be available until the last minute…
Prior to the deadline extension, many PPP lenders had already closed applications well before the March 31st deadline during the current round of funding. That’s because the SBA only had until March 31st to process applications.
But that might not be the case this time around. The PPP Extension Act of 2021 also gives the Small Business Administration (SBA) until June 30th to process applications, meaning that they could be open until the May 31st deadline.
… But funds could run out before the end of May
The PPP Extension Act of 2021 didn’t allocate more funds toward the PPP. While there’s still more money in the program, it’s not guaranteed to last two more months. Get your application in as soon as you can to avoid missing out.
How the extended deadline affects other programs
The PPP deadline extension means that this loan program will be available while the SBA rolls out two new grant programs: The Shuttered Venue Operators (SVO) Grant program and the Restaurant Revitalization Fund.
A new PPP loan could affect how much you’re eligible to receive through both programs, so weigh all of your options before you submit your application for either program.
Since there will be some overlap between the programs, it’s likely that the SBA will issue guidance on how applying for a grant will affect your PPP loan application. Sign up for the mailing list with the SBA or your local Small Business Development Center to keep on top of changes to the program.