SBA Adopts Changes to PPP Program to Make it Easier for Small Businesses to Obtain Loans
The Small Business Administration (SBA) announced a plan this week to ensure that more funding from the Paycheck Protection Program (PPP) pandemic relief loans will go to the smallest of small businesses.
PPP is a subsidized loan program designed to help small businesses stay afloat during temporary closures and revenue shortfalls caused by the corona virus pandemic. Loans are offered at a 1 percent interest rate that can later be forgiven.
The funds are used to keep employees on the payroll during the pandemic.
According to the SBA, small businesses account for 44 percent of U.S. GDP, create two-thirds of net new jobs, and employ nearly half of all workers nationwide.
The targeted relief is needed to prevent larger businesses with banking connections from draining PPP funds before smaller businesses have a chance to apply for relief.
To achieve this goal, the SBA is adopting the following qualifying criteria for businesses with 20 or fewer employees:
— Establish an exclusive 14-day application period for PPP loans limited to employers with 20 or fewer employees.
— Revise the PPP funding formula to make more loans available for sole proprietors, independent contractors and self-employed individuals.
— Eliminate restrictions that bar individuals from PPP loans due to prior non-fraud felony convictions and those who defaulted on, or in delinquency of federal guaranteed student loans.
— Open PPP loans to applicants with Individual Taxpayer Identification Numbers (ITIN).
Small Business Application Period
The 14-day PPP loan application exclusivity period for businesses with 20 or fewer employees started on Wednesday, February 24, 2021 at 9:00 a.m.
The remaining changes described above will be implemented during the first week of March.
The SBA reported Monday that it approved more than 1.9 million PPP loans for a total of $40 billion from January 11 through February 21.
The application window for the current $284 billion available for PPP loans is scheduled to close March 31. Congress has yet to decide on a PPP program extension.