Last year, Barbara Thigpen had a difficult choice to make: close her 10-year-old salon, or tap into her son’s college fund.

The salon had been closed for much of the year by the state of California’s mandate due to the pandemic. Then the government said it was offering a third round of Paycheck Protection Program loans. Thigpen thought he had found his solution.

She applied for a PPP loan on February 20 of this year, hoping the money would arrive in time to help keep the lights on in her Jason Rose living room in San Rafael. But his loan application remained in limbo. His son’s college fund is now paying the electricity bill.

“I quickly realized that without the company there would be no way to replace its college fund and that I would just have to work longer and harder,” Thigpen said.

It has been almost a year since the last round of PPP funds were made available. For the majority of small businesses, that money has already been spent. The third round opened on January 19 with $ 284 billion in funding available. But those funds are taking longer to reach small business owners because of additional compliance checks and the recent release of new rules governing how small business owners should apply for loans, according to the Small Business Administration.

It wasn’t until last week that the Biden administration announced that the changes to the app were going to be made, and then it took the SBA over a week to announce the new rules. This has left small business owners, like Thigpen, at a standstill. His bank has suspended processing of his loan pending further guidance, Thigpen said.

To make matters worse, the Biden administration previously announced an exclusive two-week window – February 24 to March 10 – for companies with less than 20 employees to apply for PPP loans. The move was taken to ensure that the country’s smallest businesses have access to loans after being mostly excluded from the first round of PPP funding. But with new application requirements dropping this week, banks and lenders are only now digesting the new requirements and have to ask many business owners to reapply and restart their applications.

“What I can’t really understand is that the government would set new rules and not understand that this two week window and these new rules would cause a conflict. It’s not the first time they’ve rolled out this program and watched it crumble, ”Thigpen said.

Hundreds of thousands of late applications

The SBA has recognized that loans take longer to process due to additional compliance checks. If no issues are raised with the applications, the agency said the approval time should be less than 48 hours. By law, the lender then has 10 days to finance the small business.

Still, hundreds of thousands of small businesses may not be approved by the SBA’s March 31 deadline for the loan program, according to members of the small business community.

So far, in this latest round of PPP, the SBA has processed 2.2 million loans through 5,100 lenders, for a total of $ 156 billion. During the first round, 1.6 million loans totaling $ 342 million were processed within days. At the time, business loans were approved for up to $ 10 million. In this cycle, loans cannot exceed $ 2 million.

In a letter to Senate and House leaders on Monday, 65 chambers of commerce, lenders, small business owners and national trade organizations are calling for the PPP deadline to be extended to at least June 30.

“There just isn’t enough time in the next month for the SBA and ~ 5,000 lenders to convert rule changes into technical, content, support, and compliance updates and then new applicants be processed, approved and funded, ”the letter said.

The US Chamber of Commerce has asked Congress to extend the deadline until the end of the year.

Lendio, an online marketplace for small business loans, processed $ 8 billion in PPP loans to 115,000 small businesses last year. But it’s moving three times slower this time around, despite hiring 1,000 more people, the company’s CEO told CNN.

“It’s so complex by a factor maybe tenfold. Fifty percent of cases submitted to the SBA fail, ”said Brock Blake, CEO of Lendio.

Many mistakes can be corrected, Blake said, but the company must contact each candidate individually to correct and resubmit the application – delaying critical funding for tens of thousands of small businesses.

This is what happened with Diane Bondareff.

When she applied for her second PPP loan with Lendio on January 28, Bondareff had to upload additional documents due to tighter fraud checks by the SBA. The delay cost her a month and she is still waiting for the money.

Bondareff runs a one-woman photography business in New York City. Her business is down 88%, which is why her request for a $ 10,000 PPP loan would make the difference between having to pack or stay.

“I wake up at three in the morning and wonder how long I can stay, when business returns. If I can get access to some money, I could stay here and hang in there and hope things get back to a certain type of business again, ”Bondareff said.

“It’s probably too late”

Fortuna Sung and Matthew Garrison opened the ShapeShifter Lab jazz club 10 years ago in Brooklyn, New York. As a small, independent music hall, they were closed for the duration of the pandemic. They are not eligible for a PPP loan because their staff are subcontractors.

But the Shuttered Venue Operator Grant, designed specifically for small concert halls, was passed in the December stimulus bill. The grant covers equal to 45% of a site’s gross revenue in 2019 – a significant increase in funding from a PPP loan. However, the SBA has yet to open applications. And business partners say they can’t afford to stay in their space after the month is up.

“Unfortunately for some sites, especially ours, it’s probably too late,” Garrison said.

The SBA says it is “building this program from the ground up and working fast to ensure that … these vital grants go to those the law intends to help.”

But if the SBA doesn’t open the grant program next month, companies like ShapeShifter Lab will be forced to shut down. Hundreds of small independent theaters have already closed for lack of funding, according to the National Independent Venue Association.

“I would be very upset because it’s basically our lifetime savings that we put in and it all evaporated,” Sung said.

– Kate Trafecante contributed to this report.