In March, the federal government took two notable steps to help new and small businesses stay afloat. First, the U.S. Small Business Administration announced changes to the Economic Injury Disaster Loan (EIDL), including:
- Moving the loan calculations from six to 24 months,
- Increasing loan caps from $150,000 to $500,000, and
- Creating a “grandfather clause” that made both changes retroactive for previous borrowers.
These changes take effect on April 6.
Second, the U.S. Senate voted to extend the deadline for the Paycheck Protection Program (PPP), which was set to sunset on March 24. This deadline would’ve prevented nearly 200,000 small businesses with outstanding PPP applications from securing a loan.
The PPP Extension Act of 2021 passed 92-7 — a rare feat of bipartisanship — and extends the deadline to May 31, while also giving the SBA an additional 30 days beyond that date to process the applications. Member of the Start Us Up coalition discussed the extension and other policymaker actions that offer entrepreneurs hope in a difficult time.
More than 1/3 of Businesses Applied for PPP a Second Time
The Economic Innovation Group reports that 35.4% of surveyed businesses applied for a second PPP loan since the end of December 2020. That figure is up from just under 25% who applied for the loan the first time it became available when the COVID-19 pandemic began. In that same period, 10% of businesses applied for EIDL. Notably, 43.5% of businesses have not applied for any assistance since the end of December.
Extension Comes at a Crucial Time for Entrepreneurs
The deadline extension will be a highly positive move for many entrepreneurs, Small Business Majority founder and CEO John Arensmeyer said in a recent TV interview. “The pandemic has not gone away, but obviously we see some light at the end of the tunnel,” he said. “So there’s no reason not to continue this [program].” In another interview with CNBC, Arensmeyer noted the extension is especially critical, given “we know many small business owners are still applying for funds, or already applied and are still waiting for their application to be approved or are hoping to receive desperately needed funds soon.”