life preserver, loan, lifesaver

The Small Business Association is kicking off a 14-day Paycheck Protection Program loan application period exclusively for businesses and nonprofits with fewer than 20 employees, President Joe Biden announced Feb. 22.

“These small businesses — not the ones with 500 employees, but these small businesses  with a handful of folks — they are 90 percent of the businesses in America,” Biden said. “But when the Paycheck Protection Program was passed, a lot of these mom-and-pop businesses got muscled out of the way by bigger companies who jumped in front of the line."

Biden said a slew of changes to the PPP will “make sure we look out for the mom-and-pop businesses even more than we already have.” 

In addition to the exclusive application period for businesses with fewer than 20 employees, which starts Feb. 24,  “the Small Business Administration will also remove barriers that have stopped many businesses from being able to apply for these loans,” he said.

Changes 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 an exclusionary restriction on PPP access for small business owners with prior non-fraud felony convictions, consistent with a bipartisan congressional proposal

  • eliminate PPP access restrictions on small business owners who have struggled to make federal student loan payments by eliminating federal student loan debt delinquency and default as disqualifiers to participating in the PPP; and 

  • ensure access for non-citizen small business owners who are lawful U.S. residents by clarifying that they may use Individual Taxpayer Identification Number (ITIN) to apply for the PPP.

“These changes will bring much-needed, long overdue help to small businesses who really need help staying open, maintaining jobs and making ends meet,” he added. “And this is a starting point — not the ending point.”

Under the Biden Administration, the SBA has taken a number of steps to increase access to loans for underserved small businesses, following criticism that in 2020, the PPP shut out too many small businesses hurt by the COVID-19 pandemic. 

“In the last month, we've increased the share of funding for small businesses with fewer than 10 employees by nearly 60 percent,” Biden said. “For businesses in rural communities, the share of funding is up nearly 30 percent since we came to office. And the share of funding distributed through banks that traditionally help minority owned businesses is up more than 40 percent.”

Biden said his administration is also boosting PPP access by increasing oversight. 

“I invite any inspector general with jurisdiction over this program to closely look at these loans and publicly report on any issues they uncover inconsistent with what I'm saying today. We will ensure every dollar is spent well,” he said. 

Main Street Alliance Government Affairs Director Didier Trinh said the Biden Administration's updates to the PPP “are a welcome recognition of the major gaps and challenges to the program. 

“These updates will help expand access, but more is needed to support small businesses. From retroactive application of these updates, to flexible grants outside the PPP program itself we look forward to continuing to work with the Administration to center Black, brown, women-owned and our smallest business owner needs, who have been disproportionately impacted by both the crisis and least likely to receive support," Trinh said.

In a Feb. 22 news release, the Main Street Alliance outlined examples of the potential impact of the PPP changes: 

“Under this change, the proprietor of a mobile food truck in Greenville, NC, a Black woman who received $3,273 in PPP funds, would be eligible for $20,678. And a Latino-owned auto repair business with one part-time employee in addition to the owner would be eligible for $23,216 — five times the $4,680 this business received under the previous rules. These businesses need funds that are adequate to stay afloat during the shutdown and care for their families, and under the previous rules, they were not eligible for enough funding.”  

More information is at sba.gov.