Congress Extends PPP2 Loan Deadline To May 31
April 2021 ISSUE April 1, 2021Practice Management Financing
This is a Free Article
Join Today for Hundreds of Resources Like This
No obligation, no credit card.Free 30-Day Trial Membership
The House of Representatives recently voted 415-3 to extend the loan application deadline for second draw (PPP2) loans from March 31 to May 31, 2021. The Senate has approved the legislation and the President has signed it into law.
This action came after intense prodding from dozens of business groups, including the ADA and AICPA. These groups cited the need for additional time due to PPP2 loan processing delays, resulting from more stringent anti-fraud screening measures and program changes made by the new Biden administration.
These changes were aimed at boosting PPP2 loans to women, minorities, and rural residents. The SBA also revamped the loan calculation formula for sole proprietors, independent contractors, and self-employed business owners (those filing Schedule C), basing it on gross collections, thereby potentially allowing them to receive larger PPP2 loans. Unfortunately, lenders weren’t able to submit borrower applications to the SBA under the revised rules until March 5, 2021, leaving insufficient time for borrowers to apply. As one banker quipped: “You can’t bake an amazing cake if you don’t give it enough time to cook!”
Our recent reader survey revealed that 97% of our members received an original PPP loan (PPP1). Eligibility for a PPP2 loan was limited to employers with 300 or fewer employees who sustained a revenue loss of at least 25% during any calendar quarter of 2020, compared to the same calendar quarter of 2019. Practices may receive a PPP2 loan of up to 2.5 times their average monthly payroll costs in the year prior to the loan, or in the 2019 calendar year, with a maximum loan amount of $2,000,000. Our survey also revealed more than 65% of our members qualified and had submitted an application for a PPP2 loan.
You must submit your PPP2 loan through an SBA-approved lender. We recommend you use the same lender as your original PPP loan in order to receive expedited processing. If you qualify and haven’t yet applied for a new PPP2 loan, be sure to do so before the extended May 31, 2021 deadline.
The McGill Advisory content Is provided For informational purposes only And does Not constitute legal, accounting, Or other professional advice.
Copyright © 2022 John K. McGill & Company, Inc.