On Tuesday, March 30, 2021, President Joe Biden signed the Paycheck Protection Program Extension Act of 2021, which extends the deadline for small businesses to apply for forgivable loans. Now, instead of the earlier March 31 deadline, businesses have until May 31 to apply for either first or second draw PPP loans. The new law also gives the Small Business Administration (SBA) an additional 30 days, until June 30, to process pending applications.
As we have previously discussed, the Paycheck Protection Program (PPP) can provide 100% forgivable loans to eligible individuals and businesses to cover payroll and benefits costs, and other permitted expenses. In February 2021, the Treasury Department made temporary changes to the program to target small business owners. Among other changes, the SBA permitted applications from only those businesses with fewer than 20 employees between February 24 and March 9. According to the SBA, more than 400,000 small businesses and non-profits received loans during this exclusivity period, and loans to minority-owned businesses, women-owned businesses, and rural-based small businesses increased by 20%, 14% and 12%, respectively.
Since the Paycheck Protection Program was created in 2020, more than $734 billion has been distributed across 8.7 million loans. For all 2021 loans, the average loan amount is $59,000, and 78.4% of all loans are for $50,000 and under.