Changes to the Paycheck Protection Program for Small Businesses

From McKonly & Asbury

On February 22, 2021, President Biden announced specific changes to the Paycheck Protection Program (PPP) to assist small businesses with fewer than 20 employees.

A summary of the five key changes to the program are below:

  1. A two-week application period specifically for small businesses. Starting Wednesday, February 24 through March 9, the administration will only allow businesses with fewer than 20 employees to apply for relief. The focus will be for lenders to assist only the smallest and hardest hit businesses with securing PPP lending.
  1. More help for sole proprietors, independent contractors, and self-employed individuals. A proposed new calculation for determining eligibility for second round PPP funding is under review for sole proprietors, independent contractors and the self-employed. The details of this new calculation are still in the works. One possible approach being discussed is to base the maximum loan amount on gross business income, rather than net business income from the sole proprietors, independent contractors, and self-employed individuals based upon their Schedule C. President Biden also noted that 70 percent of businesses without employees are owned by women and people of color. The administration will also set aside $1 billion for businesses in this category without employees located in low and moderate-income (LMI) areas.
  1. Reduced barriers for former felons. Increased access for business owners who have either: (1) an arrest or conviction for a felony related to financial assistance fraud within the previous five years; or (2) any other felony within the previous year. This would be consistent with the bipartisan proposed PPP Second Chance Act.
  1. Assistance for business owners who are late on student loans. Increased access to PPP funding for business owners who are currently delinquent or have defaulted within the last seven years on a federal debt, including a student loan.
  1. More access for business owners who aren’t U.S. citizens. New provisions would allow non-citizen small business owners who are lawful U.S. residents to use their Individual Taxpayer Identification Numbers (ITINs) to apply for relief. In addition, this will allow access to PPP for lawful U.S. residents with an ITIN like Green Card holders and those here on a visa. The SBA will address this inconsistency by issuing clear guidance in the coming days that otherwise eligible applicants cannot be denied access to the PPP because they use ITINs to pay their taxes.

There are efforts to extend these changes for small businesses beyond March 9th.

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