Demonstrating broad, bipartisan support for the program, the U.S. Senate approved a two-month extension of the Paycheck Protection Program March 25, clearing the measure for presidential signature.
The PPP was set to expire March 31, after previously being extended through the Consolidated Appropriations Act, which was enacted in December 2020. The Paycheck Protection Program Extension Act of 2021 (H.R. 1799) now extends the application deadline to May 31, 2021.
The Senate approved H.R. 1799 by a vote of 92-7, following the House of Representatives’ 415-3 vote. President Biden has indicated that he will sign the extension. “We want to ensure that every ‘mom and pop’ small business in America has the resources it needs to rehire and retain workers, purchase the health and sanitation equipment they need to keep workers safe, and pursue opportunities to expand,” the President said in a March 17 statement of support for the legislation.
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.
In approving this latest extension, various lawmakers have cited delays in processing PPP loans, which created uncertainty as to how the loans would proceed. Additionally, the SBA had reported that the March end date would have prevented all loans currently in the pipeline from being processed.
As such, the legislation specifies that from June 1 through June 30, the Administrator of the SBA shall not accept new lender applications for loans and shall only process such lender applications that have been submitted to the Administrator before June 1, 2021.
In addition to reopening the program, the Consolidated Appropriations Act 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.
Since the PPP was enacted under the CARES Act in March 2020, more than 8.2 million loans have been approved totaling more than $718 billion. The latest data for 2021 shows that 3.1 million PPP loans have been approved totaling approximately $196 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. Further, the $100,000 cap on compensation applies only to salary; the cap does not apply to employer contributions to DC and DB plans. See the October 2020 and March 2021 IRS FAQs on PPP Loan Forgiveness for additional details.
Additional information about the PPP can be found on the Small Business Administration’s website.
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