An extension of the Paycheck Protection Program into June was overwhelmingly approved by the House of Representatives Tuesday evening.
The vote was 415-3. Media reports suggest Senate approval is expected as well.
Earlier this week, the key members of the House and Senate committees that govern the PPP received a letter signed by dozens of trade associations urging an extension of the ongoing Paycheck Protection Program runs to four pages. Three of those pages are just the names of the signers.
Well more than 100 trade associations signed the Monday letter to various members of the House and Senate small business committees, urging an extension of the program that expires March 31. They wrote the letter in support of the PPP Extension Act of 2021, a bill introduced last week with bipartisan sponsorship.
The act was introduced by two Democratic senators, Jeanne Shaheen of New Hampshire and Ben Cardin of Maryland, along with Susan Collins, Republican from Maine. It would extend the program to May 31, and then tack on an additional 30 days for the Small Business Administration to process outstanding applications.The deadline for the SBA to process applications in this round is March 31, the same day as the deadline for filing. Under the proposed legislation, there would be a one-month gap between the filing and processing deadlines.
The companion bill in the House has Democratic sponsors (Nydia Velazquez of New York, among others) and Republican sponsors (Blaine Luetkemeyer of Missouri).
One omission from the list of signers of the letter: the American Trucking Associations. In fact, commercial transportation companies are notable in their absence from the list. Other signers range from the American Beverage Licensees to the Golf Club Superintendents Association, and the National Association of Trailer Manufacturers is a signer. However, other transportation-focused trade associations that might be expected on such a list are nowhere to be found.
Sean McNally, a spokesman for the ATA, said in a statement that the ATA supports the PPP but is not now seeing a significant problem with it.
“We have been very supportive of the PPP program, and have been pleased to see not just how well it has worked, but how both parties have come together to keep it working,” he said in a statement to FreightWaves. “Our members have been able to utilize PPP to keep hard-working Americans employed during the pandemic, and while we heard of challenges early with distribution and tax concerns, those issues have been addressed, and members haven’t alerted us of the need for additional advocacy. We continue to support those who face challenges and push for reasonable extensions and changes.”
Widespread problems with the current program have been reported, though it still had managed to disburse $164.95 billion across 2.4 million loans as of March 7.
“Our members are highly concerned by the lack of progress on major … PPP processing issues, including hold/error codes and application rejections due to Taxpayer Identification Number issues or mismatches,” the one-page trade associations letter says. The signers also said there have been other unspecified “unresolved technical problems.”
The end result, according to the letter, is that “these delays and denials may put many applicants in danger of not making the March 31 authorization deadline.”
The latest round of the PPP is either the second or third, depending on who is doing the counting. The first iteration of the program ended in June. It was revived in August, considered by some to be a separate round two or an extension of round one. The rules between the two were largely the same.
But the current round is operating under a different set of rules, with a cap of 300 employees for eligibility. The prior cap was 500. The current program also had a recently completed period where the SBA only took loan applications from companies with 20 or fewer employees.
Brandon Knight, management principal, Transportation & Logistics at CLA (CliftonLarsonAllen), said that given the delays he has seen with SBA processing, “an extension is certainly warranted.”
Part of the problem has been from a March 3 change in the rules that Knight said actually benefited sole proprietors like independent owner-operators. The changes altered the rules on the financial base used for consideration of loan approval, making it more likely that a loan would be approved. But changing that in the middle of the process has slowed the granting of approvals, Knight said.
Knight said he also has seen difficulties arising for companies that are in for their second round of PPP money after receiving it last year. “Folks in the first round are not getting responses for forgiveness and confirmation,” he said.
Although the percentage of PPP loans going to the warehousing and transportation sector is holding near 3.3% in this round, largely unchanged from 2020, Knight said he had seen many clients run into the 25% restriction this year. Under that rule, an applicant for a PPP loan, whether it is for the first time or second time, needs to show a 25% decline in any prior year’s quarter. That had been expected to be a problem for the trucking industry given the strong freight market.
Those applicants with problems receiving approval for PPP loans have been flocking to a Reddit group called PPPLoans. Inevitably such a group will tend to attract more unhappy and unsuccessful applicants rather than those who have no complaints, though there are reports of success, often from people who had just about given up on the program.
“I’ve just recently found out that my application has an incorrect [NAICS] code” is typical of the myriad of complaints. But another post on the Reddit board, after noting initial frustrations with one lender, cites another lender it switched to as a “godsend” in recapping how it got its loan.