PPP Changes Announced | Increased Lending to Small Businesses in Need
The Biden-Harris Administration is increasing lending to small businesses in need. In February 2021, the administration announced changes to PPP to further promote equitable access to relief. Several reforms announced by the Biden-Harris administration are targeted at the PPP to the smallest businesses and those that have been left behind in previous relief efforts, while waiting on the passage of the American Rescue Plan. A summary of some of the key changes to look out for are included below:
- Institute a 14-day period, starting Wednesday, during which only businesses with fewer than 20 employees can apply for relief through the Program. 98 percent of small businesses have fewer than 20 employees. These businesses often struggle more than larger businesses to collect the necessary paperwork and secure relief from a lender. The 14-day exclusive application period will allow lenders to focus on serving these smallest businesses.
- Help sole proprietors, independent contractors, and self-employed individuals receive more financial support. These types of businesses, which include home repair contractors, beauticians, and small independent retailers, make up a significant majority of all businesses. Of these businesses, those without employees are 70 percent owned by women and people of color. Yet many are structurally excluded from the PPP or were approved for as little as $1 because of how PPP loans are calculated. To address this problem, the Biden-Harris administration will revise the loan calculation formula for these applicants so that it offers more relief, and establish a $1 billion set aside for businesses in this category without employees located in low- and moderate-income (LMI) areas.
- PPP Second Chance Act – Allow small business owners with prior non-fraud felony convictions to obtain relief through the Paycheck Protection Program (unless the applicant or owner is incarcerated at the time of the application).
- Allow small business owners who are delinquent on their federal student loans to obtain relief through the Paycheck Protection Program.
- Allow non-citizen small business owners who are lawful U.S. residents by clarifying that they may use Individual Taxpayer Identification Numbers (ITINs) to apply for relief. The PPP statute is clear that all lawful U.S. residents may access the program, but a lack of guidance from the SBA has created inconsistency in access for ITIN holders like Green Card holders or those here on a visa.
The past few months has introduced a lot of new tax legislation, and with that, a lot of planning opportunities. If you have questions about the PPP process or would like to talk to one of our COVID-19 Advisory Team members, contact us. We’re here to help.