Biden-Harris Administration Announces Changes to PPP
In an effort to target smaller businesses, the Biden administration abruptly changed crucial rules to the Paycheck Protection Program (PPP). It is intended to help the smallest and neediest companies, which have sometimes struggled to obtain aid from the federal relief effort.
What are the five changes to the Paycheck Protection Program?
1. A 14-day application period exclusive to those with fewer than 20 employees. From February 24, 2021 through March 10, 2021, businesses with 20 or fewer employees will have exclusive access to PPP funding. Furthermore, the White House will set aside $1 billion in PPP funding for businesses in low- and moderate-income areas that do not have employees.
2. SBA will modify the loan funding calculation formula. The changes include a new way to calculate loans to increase aid to the very smallest businesses which have so far received a disproportionally small share of the relief money. While the details of the modification have yet to be announced, gross income, rather than net profit, will likely drive the loan amount calculation for these borrowers. Self-employed individuals can use gross income (similar to the approach for farmers and ranchers) to calculate their PPP loan. This will allow unprofitable businesses to qualify and allow other applicants larger loan requests. No retroactive requests are allowed for loans that have already been disbursed.
3. Owners with felony convictions can apply.
4. Business owners delinquent or in default of student loans can apply.
5. Lawful residents are eligible.
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