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PPP extension: What small businesses need to know now

July 1, 2020, 4:18 PM UTC

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For any close follower of the Paycheck Protection Program over the past three months, what happened last night was nothing unusual. With less than four hours before the PPP was set to expire at 11:59 p.m. ET on June 30, the Senate unanimously passed a bill to extend the PPP application deadline until Aug. 8. The bill passed the the House on Wednesday, and now heads to President Trump for a signature.

The bill’s extension of the PPP comes after the program was set to end with over $130 billion left of unused funds for the taxpayer program. As of Tuesday night, the latest data from the Small Business Administration shows the program lent more than $520 billion in emergency loans to over 4.8 million American small businesses. The loans are intended to help businesses keep employees on the payroll, can range up to $10 million per loan, and can become grants.

It was a bit of a nail-biter over whether or not the Senate would be able to pass the bill unanimously on Tuesday night, as Sen. Rick Scott (R-Fla.) raised an objection but approved the passage. Sen. Ben Cardin (D-Md.), who has been actively working to make further changes to the program (including proposing a new bill for what would essentially be PPP round 3), stood firm: “We need to act. We need to act tonight,” he said on the Senate floor. “The resources are there, the need is there, we just need to change the date,” Cardin said.

Here’s what new and current borrowers need to know.

Can you apply now?

Not yet, but likely soon. The bill passed the House and needs to be signed by the President.

As of Tuesday, many lenders from fintechs to national and regional banks had stopped accepting new applications in an effort to ensure they would be able to process all the applications they’d already received and get them through the SBA’s systems in time.

There are, however, those like U.K.-based fintech Funding Circle, which told Fortune in an email that it’s “currently paused on PPP lending until the extension is fully passed by Congress and signed by the President, which will trigger the SBA to reopen the E-Tran system.” But the fintech’s head of communications also noted: “In the meantime, we are taking applications. We are planning to restart processing PPP applications as soon as that is complete.”

On Tuesday, Sen. Marco Rubio (R-Fla.) wrote on Twitter that he was on board with the extension but that the real work involved getting funds to a more targeted group.

The senator also wrote in a tweet that he has “confirmed with multiple members of the administration that after #PPP applications period expires [on Tuesday], they support using the over $100 billion left untapped to target new relief for #smallbusiness.”

Indeed, the relative lack of demand for the program in the past few weeks (compared with the mad dash for funds in round one), coupled with recent studies from groups like the National Federation of Independent Business, suggests most of those who wanted a PPP loan as is have applied. (The NFIB study in June found only 3% of businesses surveyed that hadn’t applied for a loan still wanted to before the deadline).

Atlantic Union Bank, a regional bank based in Virginia, stopped accepting PPP loans before the deadline yesterday. CEO John Asbury told Fortune in an email: “We are assessing the situation and whether extending the program deadline increases demand for the PPP loan. We decided to stop accepting applications because of the lack of demand, and the need to focus on the forgiveness process for our customers.” Asbury added: “It is unclear whether an extension creates new demand or not. If we believe that the demand exists we’d be more inclined to reopen the acceptance process.”

An extension of the PPP until Aug. 8 would basically buy Congress time to pass other legislation to further target funds in whatever form that takes. So far, members of Congress have proposed legislation to send the $130 billion in leftover aid to especially hard-hit businesses: One bill proposed by Senate Democrats would dole out the funds to businesses with fewer than 100 employees that had also taken an over 50% revenue hit owing to the crisis (the House also has a similar bill). The Washington Post first reported on details of a new proposal from Senator Rubio that would include parceling off $25 billion in funds for businesses with fewer than 10 employees, among other changes.

Update, July 1: This article has been updated to reflect the passage of the bill by the House on July 1.