Banking

House members receptive to extending PPP deadline

Leaders of the House Small Business Committee signaled during a Wednesday hearing that they are open to extending the Paycheck Protection Program’s lending authority past its March 31 expiration date.

“It’s clear small businesses still need help, but lingering issues in the program [have created a] need for Congress to consider a short-term extension,” said Rep. Nydia Velazquez, D-N.Y., the committee’s chairwoman.

Though open to extending the deadline for PPP applications, Rep. Blaine Luetkemeyer, R-Mo., said legislators must recognize the temporal nature of the program.

Rep. Blaine Luetkemeyer, the committee’s ranking Republican member, said that error codes are holding up as many as 50,000 applications and that 10,000 of those may not get be resolved by the end of the month. Against that backdrop, the Missouri legislator said it is “very concerning” that Small Business Administration would be forced to stop processing loans at the end of the month.

“I’ve spoken to many lenders on this issue,” Luetkemeyer said. “Instead of taking applications that will never be processed by the SBA, they’re planning to shut down their PPP lending entirely before the … deadline.”

Lawmakers heard an earful about error codes generated by the SBA’s loan portal.

“We have one borrower that has been in a code issue since Jan. 29,” Alice Frazier, president and CEO of the $621 million-asset Potomac Bancshares in Charles Town, W.Va., told the committee.

Frazier, secretary of the Independent Community Bankers of America, said any PPP applications submitted by March 31 should be eligible for approval and funding.

“No application should be stranded by bureaucratic red tape,” she said.

Frazier’s comments echoed the key recommendation in a comment letter the ICBA and eight other financial industry trade groups recently sent to the leaderships of the House and Senate small business committees.

Some witnesses who testified Wednesday called for even more time.

Hilda Kennedy, founder and president of AmPac Business Capital in Ontario, Calif., said a 60- to 90-day extension would provide time to address the SBA’s system issues “and make sure Schedule C borrowers get the time they need” to obtain increased funding created by recent changes made by the Biden administration.

Administration officials announced plans on Feb. 22 to use gross income rather than net profit to determine loan amounts for self-employed entrepreneurs. The SBA issued an interim final rule implementing the change on March 3.

Lisa Simpson, vice president of firm service at the American Institute of Certified Public Accountants, said her group is calling for an extension of at least 60 days.

“With an impending … deadline for the PPP, there is very little time for small borrowers to determine their loan amount eligibility, file an application and resolve any potential error codes,” Simpson said.

Rep. Kweisi Mfume, D-Md., and Young Kim, R-Calif., indicated they would consider supporting a PPP lending extension.

At the same time, Luetkemeyer and the other Republican members of the committee stressed that the PPP should be a temporary program, adding that legislators should consider how it eventually close it out.

“We have to look at how to unwind and sunset this program,” said Rep. Byron Donalds, R-Fla.

The PPP “was always meant to be temporary,” Luetkemeyer said. “Across America, we are seeing vaccines in arms and lockdowns being lifted. These actions are allowing businesses the ability to start turning the corner and recover.”


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