The Biden administration announced on Monday, February 22nd, a two-week period starting Wednesday, February 24, 2021, during which only businesses with fewer than 20 employees will be able to apply for Paycheck Protection Program (PPP) loans.
The restricted application window accompanied by additional actions the White House said it is making to further expand the PPP loan program to the smallest businesses. The administration also will:
- 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 of the changes have not yet been released.
- Eliminate an exclusionary restriction preventing small business owners with prior non-fraud felony convictions from obtaining relief through the PPP.
- Eliminate an exclusionary restriction 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 said the 14-day restricted application period is designed to focus on small businesses that have fewer than 20 employees. Observing that small businesses struggle more than larger businesses to collect the necessary paperwork and secure a PPP loan through a lender, it is expected that the targeted application window will free up lenders to focus on serving these smallest businesses.
The White House statement also said that the administration would continue to work with lenders and other stakeholders 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 SBA reported Monday that it approved more than 1.9 million PPP loans for a total of $40 billion from Jan. 11 through Feb. 21. The application window for the current $284 billion iteration of PPP is scheduled to close on March 31.
