Deadline Extension to Apply for PPP Loans Passed by House, Moves to Senate

By United States Senate -, Public Domain,
By United States Senate -, Public Domain,

Last Tuesday, March 16, 2021, the House passed the Paycheck Protection Program (PPP) Extension Act of 2021 by a vote of 415-3. The bill, originally introduced on March 11, 2021, would extend the deadline to submit applications for PPP loans by two months, until May 31, 2021. The bill would also permit the Small Business Administration (SBA) to process loans until June 30, 2021, if applications are submitted by the May deadline.  

Due to the strong bipartisan support by House members, the bill is projected to be passed by the Senate this week. An extension to the application deadline for PPP is appropriate, given that the Biden Administration recently made several changes to the PPP, which were covered under a previously published blog article, and the passage of the American Rescue Plan, which provided an additional $7.25 billion to the program. 

According to the SBA, 8.2 million PPP loans totaling $718 billion have been approved since the commencement of the program in April 2020. This amount includes 3.1 million loans totaling $196 billion that were approved in 2021 thus far. There were 490,442 loans totaling $25 billion approved between February 21, 2021 and March 9, 2021. This period falls within the 14-day exclusionary application period that was reserved for small businesses with fewer than 20 employees.  

Unfortunately, problems with the PPP have been widely reported, and many large chain restaurants that should not have been eligible for the program received loans. Amid criticism, these businesses returned the funds they received: 

  • Shake Shack, a restaurant chain with more than 6,000 employees and total revenues of $594.5 million in 2019, received a $10 million PPP loan in 2020.  
  • Ruth’s Chris Steakhouse, which employs over 5,700 workers and had $468 million in revenues in 2019, received a $20 million PPP loan in 2020.   
  • Potbelly Corporation, which owns a chain of restaurants employing 6,000 employees and had total revenues of $410 million in 2019, received a $10 million PPP loan in 2020. 

In contrast to these multi-million dollar loan approvals, the SBA reported that the overall average PPP loan size as of March 21, 2021 was $63,000—76.4% of approved loans were for $50,000 or less.  

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The following chart shows the breakdown of loan amounts and approvals as of March 21, 2021: 

Prompt Senate approval of the PPP Extension Act is critical. It is clear that small businesses are still struggling. According to data from Opportunity Insights, a Harvard University research team, between January 2020 and March 2021, the percentage of “small businesses open” (defined as businesses that showed monetary activity) declined by 32.7%.  

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