Biden administration expands SME loan program

President Joe Biden has extended the period during which small businesses must apply for loans to offset costs related to the COVID-19 pandemic. According to Bloomberg, Biden signed the legislation in a short ceremony Tuesday, March 30, calling it a bipartisan effort that gives businesses two extra months – from March 31 to May 1 – to apply for the Paycheck Protection Program (PPP).

The legislation also gives the Small Business Administration (SBA) an additional 30 days to process loans, to alleviate the longer wait times that developed when the government instituted tighter control to avoid fraud.

According to PYMNTS Main Street Survivor Study Since the start of this year, those restrictions initially only accepted applications from companies that could show they had experienced a reduction of at least 25% in their revenues, leading to a significant drop in applications.

The PPP, which was created last year under President Donald Trump, has so far granted more than 8.7 million loans to small businesses at a cost of more than $ 734 billion. The loans are free and guaranteed by the federal government. Payroll, rent, and other expenses can be waived, meaning many of these loans will become federal grants.

According to Bloomberg, the Biden administration changed the program earlier this year, offering a two-week application period only for businesses with less than 20 employees and a new calculation formula for businesses run by sole proprietors, both changes being designed to help companies struggling when the PPP was first launched.

The new legislation comes just days after the SBA announced it would give business owners much greater relief from COVID. From April 6, small businesses will be able to request up to two years of trade relief to a maximum of $ 500,000. Prior to this change, loans were for six months and limited to $ 150,000.

“More than 3.7 million businesses employing more than 20 million people have found financial assistance through SBA Economic Disaster Loans, which provide low-interest emergency working capital to help save their businesses, ”SBA administrator Isabella Casillas Guzman said in a statement. “However, the pandemic has lasted longer than expected and they need bigger loans. “

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