The Biden administration announced several impactful amendments to the Paycheck Protection Program (“PPP”) on Monday, February 22, 2021. These changes will make it easier and more likely for businesses with 20 or less employees to secure PPP loans through the Federal Small Business Administration (SBA) in the hopes that they can remain open during these challenging times.
Under the program’s revisions, sole proprietors, independent contractors, and the self-employed will also now be eligible to apply for PPP loans and should have an easier time in obtaining the funding.
The pool of available funding will be expanded and made available to small businesses through the end of March 2021 with $1 billion of the funding earmarked for the exclusive use of small business owners who don’t have employees and are located in low- and moderate-income areas.
To avoid the issue of larger businesses which have better connections with the financial institutions who fulfill PPP loans obtaining funding first – an unexpected issue that arose when the program was first launched – the Biden administration is opening up the amended loan program for a 14-day period only to small businesses that have 20 employees or fewer. Larger small businesses (those with 21-300 employees) will then have an additional three weeks after the two weeks to apply for a PPP loan before the program expires.
Additional enhancements to the program eliminate prior restrictions which prohibited certain small businesses from obtaining PPP loans. These revisions open opportunities for the following groups to now obtain a 2021 PPP loan:
- Small businesses which are at least 20% owned by someone who had a prior felony conviction, provided the charge was not fraud-related;
- Small business owners who have been delinquent on their Federal student loan payments; and
- Small business owners who are not full citizens but who are legally residing in the U.S.
Although these changes will make securing a PPP loan easier for the most challenged small businesses, the terms of these loans remains unchanged in that they are only eligible for forgiveness if the borrower uses 60% or more of the PPP funds to handle payroll-associated items like salaries and group health insurance costs.
For more information on the PPP loan program and the new changes that may help you qualify, contact your Untracht Early advisor.