As the deadline looms closer for business owners to request funds from the Paycheck Protection Program (PPP), President Joe Biden announced changes to help owners of the smallest businesses—those with 20 or fewer employees—receive funds before the program expires on March 31. The changes to the PPP will give lenders more time to work with the smallest businesses so they can receive funding before the program expires.
Only a little more than a month before the program expires, the Biden administration announced changes to the PPP. The changes are intended to benefit extremely small businesses, many of which are owned by women and members of other minority groups, that have so far received a disproportionally small share of the relief money, says The New York Times.
The biggest news is that the Small Business Administration (SBA) established a 14-day window that began on February 24 during which loan applications are exclusive to businesses and nonprofits with fewer than 20 employees, according to the SBA website.
In addition to exclusively serving the smallest businesses for two weeks, SBA announced several additional changes. These changes are meant to help the latest round of PPP funds reach small and low- and moderate-income (LMI) businesses who have not received the relief a forgivable PPP loan is meant to provide. Under the new rules, SBA will:
- Allow sole proprietors, independent contractors, and self-employed individuals to receive more financial support by revising the PPP’s funding formula for these categories of applicants
- Eliminate several exclusionary restrictions on PPP access for small business owners with prior non-fraud felony convictions or with student loan debt delinquency
- Confirming and clarifying access for non-citizen small business owners who are lawful U.S. residents
“These changes will hopefully be a positive signal to small and underrepresented businesses who have had challenges navigating PPP that lenders will work with them on their application,” says James Jack, Head of the UBS Business Owner Client Segment. “With the program’s expiration only a few weeks away, it is important that business owners who are interested in either a first or second draw PPP loan gather their required information and apply as soon as possible.”
The Biden Administration is making this drastic change on the heels of President Trump’s $900 billion stimulus bill from December, which included $284 billion for businesses with 300 or few employees as part of PPP. To extent the support even further, President Biden called on lawmakers to approve his $1.9 trillion stimulus plan, which he says will include $50 billion to help the hardest hit small businesses after the PPP has expired. As of now, the Administration is not asking to extend the program.
To learn more about the changes and how you can apply for relief from the PPP, please refer to the Latest COVID-19 Relief Overview for Business Owners.
Steven Young is a Senior Vice President of Wealth Management for UBS Financial Services. He is the team lead for the Young Business Transition Consultants based in Indianapolis, IN.