The Biden administration has announced some tweaks to the Paycheck Protection Program (PPP) meant to boost access to the forgivable loans for mom-and-pop businesses.
The Small Business Administration will soon accept applications for PPP loans exclusively from businesses and nonprofits with fewer than 20 employees, for a period of 14 days. The SBA says that the share of the program's funding going to businesses with fewer than 10 employees is up nearly 60% when compared with the same point in the program last year. But the Biden administration wants to further target the PPP to the smallest businesses. The 14-day period will start on Wednesday, February 24, 2021, at 9:00 am.
The SBA will also allow sole proprietors, independent contractors and self-employed individuals to receive more financial support. These types of businesses, which include home repair contractors and small independent retailers, make up a significant share of all businesses. The SBA will revise the PPP's calculation formula for these applicants so that it offers more relief.
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The SBA is eliminating the restriction that prevents small-business owners who are delinquent on their federal student loans from getting a PPP loan. Currently, the PPP is not available to any business with at least 20% ownership by an individual who is currently delinquent or has defaulted within the past seven years on a federal debt, including a student loan.
The agency will also eliminate the restriction that disqualifies small-business owners with prior non-fraud felony convictions from getting a PPP loan – a move with broad bipartisan support. The SBA has also clarified that small-business owners who are not U.S. citizens, but are lawful U.S. residents, may use their Individual Taxpayer Identification Number to apply for a loan. These changes will be implemented by the first week of March.
Congress provided $284 billion for the latest round of PPP loans under the coronavirus relief package passed in December. As of February 18, less than half of those funds have been used.
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