There's little doubt that the Paycheck Protection Program's current deadline of March 31, 2021, will once again get extended.
The Senate is readying a vote--likely early next week--on a bill that would push the deadline to apply for a forgivable loan for another two months, as well as provide the Small Business Administration extra time to process loans received prior to the newly proposed end date of May 31. A companion bill already passed the House on Tuesday.
But this likely won't be the last PPP legislation. While the House approved the measure by a wide majority--with just three members dissenting--the back and forth in the Senate offered a glimpse of changes that may be in store for the program.
Here are three ways the PPP could change--beyond its imminent stay of execution.
1. Restrict the SBA's ability to play favorites.
Marco Rubio (R-Fla.) expressed interest in preventing the SBA from prioritizing certain PPP applicants over others, beyond what's in the statute. So for example, the SBA wouldn't be allowed to comply with future Biden administration requests to give special access to the smallest businesses, which is what happened on February 22. Two days later, the SBA stopped processing loans from businesses with more than 20 employees for 14 days, per a request from the president. The SBA, in a release at the time, specified that it would still process all applications that lenders had already submitted to the agency before the start of the exclusivity period.
2. Allow solopreneurs to apply for retroactive funding.
Also on February 22, the Biden administration announced a change to the formula that sole proprietors, independent contractors, and self-employed entrepreneurs use to calculate their PPP loan. Rather than using net income, which removes taxes and other expenses, these borrowers may use gross income, which allows them to book higher loan amounts. A bevy of senators including Ben Cardin (D-Md.), chair of the Senate Committee on Small Business & Entrepreneurship, and Joni Ernst (R-Iowa) said they would back retroactivity for these borrowers. Representative Nydia Velazquez (D-N.Y.), chair of the House Committee on Small Business, also supports a legislative fix that would allow solopreneurs who've already applied for and received a PPP loan to retroactively apply for more money.
3. Allow borrowers to apply for both a first and second-draw loan regardless of the eight-week window.
Currently, there's nothing stopping borrowers from applying for their first- and second-draw loans. However, first-draw borrowers do need wait eight weeks--that is, the minimum covered period--and spend down most or all of their first-draw loan's proceeds before they can access a second-draw loan. There is interest in reducing this window or even dispatching it altogether. In other words, lawmakers could allow borrowers to apply for both their first- and second-draw loans at the same time. However, as Neil Bradley, the U.S. Chamber of Commerce's chief policy officer, points out: "That's a much bigger change."
It's also worth noting that if the program gets extended, it would be relatively simple to apply for both a first- and second-draw loan during this newly extended round, as borrowers could just wait eight weeks before applying for a second-draw loan. So even without a legislative fix, many borrowers could pursue a second-draw loan in the same round in which they received a first-draw loan. There's also around $100 billion left in the program, so there's plenty of money for borrowers who were unable to get funding during earlier rounds.