The two-week window restricting the Paycheck Protection Program (PPP) portal to businesses with fewer than 20 employees ended Tuesday night but may not have been as fruitful as intended.
The Small Business Administration (SBA) updated its systems only Friday, The New York Times reported, meaning changes the Biden administration outlined Feb. 22 and codified last Wednesday — namely, allowing sole proprietors, independent contractors and the self-employed to use gross income rather than net profit to calculate the amount of PPP funding they should receive — have only been taken into account on applications processed over the past five days.
Additionally, the Federal Reserve Board on Monday extended the PPP Liquidity Facility through June 30, but it takes an act of Congress to push back the program's March 31 deadline.
At least one set of lawmakers — the House Small Business Committee — is set to hold a hearing Wednesday on the program's status.
Rep. Nydia Velázquez, D-NY, who leads the panel, said, "It's clear that small businesses are still feeling the effects of the Covid crisis and need PPP's support."
However, the deputy director of the National Economic Council, said Tuesday at a White House briefing "there's still plenty of time left in this program," according to The New York Times. "There's still plenty of money available," Bharat Ramamurti said.
Still, several of the program's largest lenders have announced they're shutting their application acceptance window early. Bank of America said in a statement on its website that it stopped taking new applications Tuesday for first- and second-draw PPP loans from clients.
"We have 30,000 applications in process and want to allow enough time to complete the work and get each client's application through the SBA process," Bill Halldin, a spokesman for the nation's second-largest bank, told The New York Times.
JPMorgan Chase set a March 19 deadline for borrowers to apply for PPP loans.
Citi said it would not accept PPP loan applications after March 20.
PNC, in an update Wednesday, said it has resumed submissions and is accepting applications from eligible customers. Similarly sized banks, including U.S. Bank, Truist and Wells Fargo, have not posted cutoff times on their websites as of Wednesday morning.
Other lenders ranking among the program's five most prolific — Cross River Bank and Customers Bank — told the Times they had started using the new formula to process loans Monday.
One drawback for borrowers is, applications processed after the new guidance was announced but before the SBA's system was updated would be calculated using the old formula, leaving some applicants with much less than the new formula would have gotten them.
Lenders could also have chosen to pause processing until the SBA instituted the changes, but that would have created a backlog, putting some completed applications at risk of not being processed before the deadline.
To that end, several trade groups urged the SBA to subsequently approve any PPP loan application submitted by the March 31 cutoff.
Paul Hastings, a Los Angeles-based self-employed graphic designer, submitted his application Feb. 24, two days after the new formula was announced, assuming his paperwork would be automatically updated. He received a form letter Monday from his lender, SmartBiz, telling him his loan was processed under the old formula and that he could either accept the loan offer — for less than he would have received with the Feb. 22 changes — or cancel his application and resubmit, with the chance that the new paperwork might not be processed in time.
"It just seems so arbitrary and chaotic," Hastings told the Times.
SmartBiz contacted Hastings on Tuesday, after the Times published, and offered to "help him secure a higher loan amount if he qualifies," company spokeswoman Judy Balint said.