Following is new information about changes that President Biden is making so that PPP funding reaches smaller, minority-owned firms and sole proprietors that were left behind in previous rounds of aid.
PPP loan revisions to benefit small, minority-owned businesses and sole proprietors
The Biden Administration announced Monday that it would institute a two-week period beginning Wednesday, February 24th during which only businesses with fewer than 20 employees will be able to apply for Paycheck Protection Program (PPP) loans.
This exclusive application period is designed to help the 98% of small businesses that have fewer than 20 employees. These businesses have often struggle more than larger businesses to collect the necessary paperwork and secure a PPP loan through a lender. The intention of the targeted application window is to free up lenders to focus on serving these smallest businesses.
This is just one of several moves the President is making to target PPP funding to the smallest businesses. The administration also plans to do the following:
- Change the PPP loan calculation formula to help sole proprietors, independent contractors, and self-employed individuals receive more financial support. In addition, $1 billion will be set aside for businesses in this category that don’t have employees and are located in low- and moderate-income areas. Details for this are forthcoming.
- Eliminate a restriction which has prevented small business owners with prior nonfraud felony convictions from obtaining relief through the PPP.
- Remove a rule preventing small business owners who are delinquent on federal student loan payments from securing a PPP loan.
- Allow noncitizen small business owners who are lawful U.S. residents to use individual taxpayer identification numbers (ITINs) to apply for relief.
The administration will also continue to work with lenders to address PPP processing delays caused by anti-fraud validation checks that must be completed before loan guaranty approval is granted. The statement said the U.S. Small Business Administration (SBA) would continue to work with lenders to create streamlined processes to resolve issues as quickly as possible while still working to ensure taxpayer funds are spent wisely.
The administration also will make the following moves:
- Update of SBA websites to help applicants find resources for understanding relief options and completing applications.
- Continue to conduct stakeholder outreach to learn more about challenges and opportunities in the implementation of current emergency relief plans.
- Launch a new initiative to increase communication with lenders. Specifically, the SBA will increase opportunities for lenders to provide recommendations and ask questions about the PPP. The goal is to drive resolution of open questions and concerns in a more streamlined way.
The SBA reported that it approved 1.8 million loans for a total of $133.5 billion through Feb. 18. Adding in PPP applications submitted to the SBA but not yet processed, the totals grow to nearly 2 million loans for $154.1 billion. The application window for the $284 billion program is scheduled to close March 31.
Journal of Accountancy, Jeff Drew, 2/22/2021.
We will continue to keep you informed as more information is released.