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Biden Expands PPP Access to Smallest Businesses

Biden Expands PPP Access to Smallest Businesses

Biden Expands PPP Access to Smallest Businesses

Today, the Biden administration announced updates to the Paycheck Protection Program (PPP) aimed at increasing access to funding for businesses smaller than 20 employees, among others. 

"Millions of main street small businesses – especially Black- and Brown-owned small businesses – are struggling to make ends meet in the wake of the COVID-19 pandemic and resulting economic crisis," the White House said in a statement released this morning

"The Biden-Harris administration has made delivering equitable relief to hard-hit small businesses a top priority."

Here is an overview of some of the changes: 

14-Day Head Start for the Smallest Businesses (20 or Fewer Employees)

Beginning Wednesday, February 24 at 9 a.m., EST, businesses with 20 or fewer employees will get exclusive access to apply for PPP loans for a 14-day period. These businesses make up 98% of all small businesses in the United States, yet their efforts to acquire PPP funding has often been given lower priority by banks focusing on larger, higher-profile clients. The Biden administration also states that they plan to "make a sustained effort to work with lenders and small business owners to ensure small businesses take maximum advantage of this two-week window," per the White House's official announcement

More Support for Independent Contractors, Sole Proprietors, and other Self-Employed Individuals

The Biden administration has changed the loan calculation formula for Independent Contractors (1099), Sole Proprietors, and other Self-Employed Individuals to give them more equitable access to PPP funding. The previous calculation model largely excluded these workers, or drastically reduced the amount of funding they qualified for, some receiving as little as $1. The administration has allocated $1 billion for businesses in this category. 

Eliminating Non-Fraud Exclusionary Restrictions

Previously, small business owners with a felony in the last year, and/or a fraud-related felony in the past five (5) years, were automatically excluded from recieving any PPP relief. While the fraud-related felony restriction will stand, the one-year lookback will be eliminated for small business owners with non-fraud felonies. This comes via the PPP Second Chance Act, passed in December 2020. 

The changes also lift the exclusionary restrictions for businesses with at least 20% ownership by someone who is currently delinquent on, or has within the past seven years defaulted on student loans. Delinquency/default on other federal debts may still prohibit access to PPP loans for these businesses, though. 

Ensure Access for Non-Citizen Small Business Owners

The SBA's guidance on inclusion for non-citizen small business owners who use Individual Taxpayer Identification Numbers (ITIN's) to pay taxes has been unclear. This has prohibited small business owners in this category from gaining access to PPP relief. With today's update, these PPP applicants who would otherwise qualify cannot be denied access simple because they pay taxes using ITIN.

"While these efforts are no substitute for passage of the American Rescue Plan, they will extend much-needed resources to help small businesses survive, reopen, and rebuild."

Click here to learn more and read the White House's official statement.

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