House votes to extend PPP deadline until May 31

The House voted to provide an extra two months for the Paycheck Protection Program, giving businesses until May 31 to apply for forgivable loans during the pandemic.

The House passed the PPP Extension Act on Tuesday evening after lawmakers heard from small businesses, lenders and an official from the American Institute of CPAs during a hearing last week on the need to extend the program (see story). Under the bill, the Small Business Administration would also have an additional month, until June 30, to process applications. If it’s passed by the Senate and enacted into law, the PPP Extension Act would avoid the lapse of a critical relief program that has offered small businesses nearly $700 billion in emergency loans to date.

Congress originally included the PPP as part of the CARES Act last March as a way to provide small businesses with forgivable loans backed by the SBA if they retain employees. The program’s ever-changing rules and regulations made it difficult for many small businesses to get loans initially and instead many of the loans instead went to larger companies that had existing relationships with banks. The initial funding ran out, and Congress provided a fresh round of funding before the program expired last summer with billions in unused funds. Last December, the Consolidated Appropriations Act revived the program with $284 billion in funding, much of it left over from last year. The Biden administration decided to target it more specifically to smaller businesses this year, especially ones from underserved communities, and set aside a special two-week period for the smallest companies. However, validation checks that were added to the program to prevent the kind of fraud seen last year held up many of the applications, and the AICPA advocated for extending the program and reducing the fraud error codes on behalf of clients who were legitimately applying for the desperately needed loans.

David Paul Morris/Bloomberg

The bill enjoyed bipartisan support in Congress and lawmakers introduced a bipartisan bill in both the House and the Senate last week to extend the PPP deadline (see story). Now that the House has passed the bill, it will move to the Senate. “Based on recent economic data and the demand for PPP loans, it’s clear that small businesses still need support,” said House Small Business Committee chair Nydia Velázquez, D-New York, who presided over the hearing last week. “We are making progress in our public health fight against this virus, but this pandemic continues to impact communities across the country, and we can’t let up on our efforts. By providing small businesses with two more months to apply and giving the SBA an additional month to process applications, we will help ensure critical support isn’t cut off.”

Her Republican counterpart on the committee had joined her in sponsoring the bill. “As America begins to open up for business and vaccines become more widely distributed across the country, we must provide targeted relief for small businesses that need it most," said ranking member Blaine Luetkemeyer, R-Missouri, in a statement. "This bipartisan legislation provides a commonsense extension to the Paycheck Protection Program and the tools for Main Street USA to contribute to their local economies once again.”

The Senate Small Business and Entrepreneurship held a hearing Wednesday to discuss the PPP extension. Sen. Ben Cardin, D-Maryland, who chairs the committee, introduced the PPP Extension Act in the Senate with Sen. Susan Collins, R-Maine, and Jeanne Shaheen, D-N.H., to extend the PP deadline until May 31 and provide an additional 30-day period for the SBA to process applications that are still pending.

On Monday, over 90 trade associations and chambers of commerce sent a letter to congressional leaders urging passage of the bill. “I hope that [the PPP Extension Act] will clear the hotline and we can do it by consent as early as next week,” said Cardin during the hearing. “I would urge my colleagues to continue in a bipartisan way to support this extension in a clean manner. We will have opportunities to look at additional changes or modifications to PPP and I can assure you that the way that's going to be done is in a bipartisan manner with Democrats and Republicans working together, as we have throughout the entire development of the programs that help small businesses.”

The AICPA pointed to the need for continued support for the program Tuesday ahead of the vote in the House to pass the bill. “Navigating the interplay of programs such as PPP, the employee retention tax credit, Shuttered Venue Operator Grant and the Restaurant Revitalization Fund is challenging as guidance for these programs is incomplete, complicating the efforts of CPAs to assist their small business and not for profit clients,” said AICPA president and CEO Barry Melancon in a statement. “As the March 31 PPP application looms and the program remains plagued by operational challenges, CPAs are working diligently to assist as many clients as possible prior to the deadline — but more time is needed. A 60-day deadline extension will give SBA the necessary runway to address technical challenges, produce needed guidance, and work with program stakeholders to ensure as many eligible businesses that need to apply for a loan can enter the program.”

The AICPA gave several examples of CPAs who were helping clients with their PPP loans.

“Clients are appreciative but also really stressed and worried,” said Andrea Parness of A. Parness Company in Rockaway, New York. “One client, as an example, is an independent videographer who had to take money from his IRA this year to pay his bills. He is eligible for a $7,000 PPP loan, which might not seem like a lot, but this $7K will help him get through the next several months. Other clients were so desperate for the money that they rushed to get their applications in as soon as PPP2 opened in January, and now these clients are missing out on additional funding because the guidance changed.”

Many accountants are helping family businesses with applying for the loans as well as forgiveness on the loans. “I serve the small guy — mom and pop shops,” said Tony Khait of Eco-Tax in Brooklyn, New York. “Dealing with the Employee Retention Credit and with the PPP bumping up with tax season is challenging. My firm is 500 tax returns behind compared to this time last year. Many clients haven’t read all the information on PPP, so I need to take additional time to explain everything. I also have hundreds of Schedule C clients that I could help if there was more time.”

The PPP has been helping many small businesses survive during the pandemic. “The PPP is a great program,” said Gwen Young, a partner at Young and Wadlington in Lexington, Kentucky. “I’ve seen a lot of people get funded and keep their employees in place. However, many business owners, particularly Schedule C filers, are not even aware of the program and could greatly benefit from the funds. The government changing the rules mid-way through has benefitted some groups at the expense of others. PPP is not an equal playing field. We need to restore equity.”