It’s unclear how many potential borrowers the bill will help without more money being pumped into the program. And the law also doesn’t extend the May 31 deadline for loan applications.
“No new PPP financing is currently proposed,” said Paul Merski, executive vice president of the Independent Community Bankers of America, which represents lenders who make PPP loans. “It’s hard to see how all of this can be implemented before the money runs out.”
The last-minute proposal is the latest complication of PPP, which policymakers have implemented via ad hoc and constantly evolving guidelines since its inception at the start of the pandemic. The program has nevertheless been one of the most popular Covid-19 relief efforts, offering nearly 9.9 million forgivable loans worth more than $ 762 billion.
It was not immediately clear how quickly the legislation would move forward. Supporters of the bill should seek unanimous consent from the Senate to pass it on an expedited basis. Otherwise, the legislation would risk getting bogged down in a long debate on the ground.
Congress is returning to PPP after passing a law less than a month ago that extended its application deadline from March 31 to May 31. that the program would be on track to run out of money long before the new deadline.
This week, Congress is once again proposing changes to the program without allocating more funds. While Cardin said earlier this month he would be open to a bipartisan effort to add more money, sources following the negotiations said Republicans were resistant.
“Congress needs to pass this bill as quickly as possible so that eligible small businesses have time to get the help they need before the PPP closes on May 31,” Cardin said Tuesday.
The new bill would add new requirements on the limited financial resources of the PPP.
The legislation is a response to complaints raised after President Joe Biden revised PPP rules in March so self-employed, sole proprietors and independent contractors could benefit from larger loans.
While the administration’s idea was to help a group that had long had access difficulties, the changes were only offered to companies applying for new loans. This sparked backlash from business owners who had previously received PPP loans and were unable to retroactively increase the amount of aid they had already received.
Cardin’s bill would allow left-behind self-employed workers to seek additional help under the P3. Similar treatment would also apply to farmers and ranchers. The SBA would be required to create a new process that would allow these companies to request a recalculation and potentially receive payment equal to the difference between what they would have received under the old rules and what they would have received under the old rules. new rules.
“The Biden administration has taken steps to make P3s more useful to farmers, ranchers and sole proprietors, so making the changes retroactive is a matter of fundamental fairness,” Cardin said.
The change could prove to be a significant administrative headache for the SBA and the private lenders who are responsible for granting loans on behalf of the agency.
Banks have warned that the smallest applicants can often be the most complicated to deal with, and some lenders may be reluctant to work with borrowers on retroactive changes.
The SBA, a relatively small agency, already faces huge challenges in administering the PPP as well as separate bailout programs for performance venues and restaurants.
“SBA is overwhelmed with what’s already on their plate,” Merski said.
One concern among supporters of the legislation is how quickly the SBA would be able to implement it if Congress passes the bill. In the past, the SBA took weeks to write rules to execute PPP changes.
“We would be really interested to see how the SBA plans the implementation, especially the communication to lenders encouraging them to work on this retroactivity,” said Rebecca Shi, executive director of the American Business Immigration Coalition. “These are the smallest borrowers. The majority are businesses of color or rural businesses that will be affected. They have been excluded from this program and so this is their opportunity for more comprehensive relief.”