House passes PPP extension bill giving small businesses more time to apply for lifeline

Small businesses struggling to weather the coronavirus crisis will have several more weeks to take advantage of a popular federal loan program that's already distributed $500 billion to keep Main Streets alive.
The House Wednesday followed the Senate's lead Tuesday and voted to extend the Paycheck Protection Program through Aug. 8. Created earlier this year as part of the CARES Act to help the nation respond to the fallout from the COVID-19 pandemic, PPP expired Tuesday.
The program has about $130 billion left to spend although lawmakers and the Trump administration are in talks to tweak the PPP to reach hard-hit businesses such as restaurants and hotels that have had trouble making use of financial help.
Passage of the extension came on the same day that House lawmakers were taking the Small Business Administration to task for another program designed to rescue mom-and-pop firms following the social distance guidelines instituted after the coronavirus landed on U.S. shores.
But as the COVID-19 pandemic began shuttering the economy this spring, thousands of small businesses seeking rescue under the federal Economic Injury Disaster Loan Program ran into a wall: few answers on their status; periods where applications weren't accepted; shifting regulations; hours waiting on hold.
Then without warning, the Small Business Administration in trying to make its pool of money go further cut the maximum EIDL loan from $2 million to $150,000 – a change many applicants never learned about until they received their money.
"Throughout the process, SBA showed a lack of understanding of the challenges facing small businesses related to COVID-19," House Small Business Committee Chair Nydia M. Velázquez, D-N.Y., said during a hearing on the program Wednesday.
Her concerns, directed at SBA Associate Administrator James Rivera as he sat in the hearing room, were echoed by Republicans and Democrats on the committee who shared stories of constituent dissatisfaction.

Florida Republican Ross Spano criticized the agency for consistently poor communication.
"In my district, I got literally hundreds of calls with respect to the frustration business owners were having getting information, and not having questions answered, not knowing about the status of their applications," he told Rivera. "We can do better and we have to frankly."
Rep. Angie Craig, D-Minn., who sponsored the PPP extension bill the House passed Wednesday, described the management of the EIDl program  as "absolutely terrible."
"I've got a lot of businesses in my district who, if this were the kind of customer service level they had provided, would be out of business three months ago," she told Rivera. "I've got folks in my district who applied and heard crickets for a month. No response from the EIDL program."
Rivera acknowledged the criticisms.
"The last three months, it's been a tough road obviously," he said. "We clearly understand we have to do a better job communicating."

But he also said the stumbles were due to hiccups associated with an unprecedented ramp-up to meet the pandemic's fallout from an agency traditionally processing a much smaller volume of aid. The SBA staff handling disaster loans mushroomed from about 1,000 to more than 7,000, and the applications have already totaled 8 million, he said.
Tweaks to the program by Congress and a shortfall of funds at one point contributed to delays, he said.
Scrutiny over EIDL has been overshadowed by the larger and more prominent Paycheck Protection Program which has provided nearly $520 billion in forgivable loans to small firms during the coronavirus crisis. After initial bumps, the PPP has been largely viewed as a success. 
Rep. Nydia Velazquez, D-N.Y., and others participate in an event with DACA (Deferred Action for Childhood Arrivals), TPS (Temporary Protected Status), and DED (Deferred Enforced Departure) recipients on Capitol Hill in Washington, D.C., on March 6, 2019.
Brendan Smialowski, AFP/Getty Images
There still remain accessibility hurdles however, according to, a business consultant firm. A survey it conducted found that 11% of business owners said they had applied for the PPP loan, but had yet to receive the funds, while another 17% said they tried to apply but found the process too complicated to complete. 

Unlike the PPP, a brand new program that provides up to $10 million through private lenders mainly to keep workers on the payroll, loans under the already existing EIDL are processed solely by the SBA and can be used for a wider array of business expenses.
EIDL has disbursed about $130 billion in grants and (mostly) loans and has another $200 billion available through mid-December, Rivera said. Loan eligibility is often tied to a business' credit score and is supposed to provide six months of working capital.
About 80 percent of loan requests are below 150,000 with the average award at $61,000, Rivera said. And the average time to process a loan has dropped from 41 days to less than a week.
After Congress expanded EIDL eligibility to include agricultural firms, SBA stopped accepting loan applications from non-farm businesses for at least two weeks. Rivera said the agency needed time to "retool" its processing system since it had not processed agriculture-related loans in decades.

That did not satisfy Velázquez.
"Do you realize how many borrowers were calling our offices crying out because they needed assistance but the (on-line) portal was shut down for them," she told him.
The decision to cap the loans at $150,000 did not sit well with several members either.
"While this is likely to ensure the maximum number of businesses receive some sort of funding during this crisis, my constituents are rightfully upset," Rep. Pete Stauber, R-Minn, told Rivera. "They feel they are being cheated out of what they were promised by our government."
Previous Post Next Post