The two-week window limiting the Paycheck Protection Program (P3) portal to companies with fewer than 20 employees ended Tuesday night, but may not have been as successful as expected.
The Small Business Administration (SBA) did not update its systems until Friday, The New York Times reported, which means the changes that the Biden administration described on February 22 and codified last Wednesday – namely, allowing sole proprietors, independent contractors and self-employed workers to use gross income rather than net profit to calculate the amount of PPP funding they are expected to receive – have only been factored into the requests processed in the last five days.
In addition, the Federal Reserve Board extended monday the PPP Liquidity Facility until June 30, but an act of Congress is needed to extend the March 31 deadline.
At least one set of lawmakers – the House small business committee – are due to hold a hearing on the status of the program on Wednesday.
Representative Nydia Velázquez, D-NY, who leads the panel, said: “It is clear that small businesses are still feeling the effects of the Covid crisis and need the support of PPP.”
However, the deputy director of the National Economic Council said in a White House briefing Tuesday “there is still a lot of time left in this program,” according to the New York Times. “There is still a lot of money available,†said Bharat Ramamurti.
Yet several of the program’s largest lenders have announced that they are closing their window for accepting applications early. Bank of America said in a statement on its website that it stopped receiving new requests for first and second draw PPP loans from customers on Tuesday.
“We have 30,000 open applications and want to leave enough time to complete the job and get each client’s application through the SBA process,†said Bill Halldin, a spokesperson for the second largest bank in the country, at the New York Times.
JPMorgan Chase set a deadline of March 19 for borrowers to apply for PPP loans.
Citi said it will not accept PPP loan applications after March 20.
Cabin crew, in a update wednesday, said it resumed submissions and accepted requests from eligible customers. Banks of similar size, including American Bank, Truist and Wells fargo, did not post cut-off times on their websites as of Wednesday morning.
Other lenders ranked among the program’s five most prolific – Cross River Bank and Clients Bank – told The Times they had started using the new formula to process loans on Monday.
One drawback for borrowers is that applications processed after the new guidelines were announced, but before the SBA system update, would be calculated using the old formula, leaving some applicants with much less than the SBA system. new formula would not have obtained them.
Lenders could also have chosen to withhold processing until the SBA instituted the changes, but that would have created a backlog, putting some completed applications at risk of not being processed by the deadline.
To this end, several commercial groups urged the SBA subsequently approve any PPP loan application submitted by the March 31 deadline.
Paul Hastings, a Los Angeles-based freelance graphic designer, applied on February 24, two days after the new formula was announced, assuming his documents would be automatically updated. He received a standard letter Monday from his lender, SmartBiz, telling him that his loan had been processed under the old formula and that he could either accept the loan offer – for less than what he would have received with the February 22 changes – or cancel their request. and resubmit, with the possibility that new documents will not be processed on time.
“It seems so arbitrary and chaotic,†Hastings told The Times.
SmartBiz reached out to Hastings on Tuesday, after the Times’ publication, and offered to “help him get a larger loan amount if he qualifies,” company spokeswoman Judy Balint said.