On February 22, 2021, the Biden-Harris Administration announced changes being made to the Payroll Protection Program (PPP) to ensure distributions are happening equally. The measures put in place are to target relief to America’s smallest businesses and those left behind in previous relief efforts. These reforms target Minority-owned, women-owned, and other underserved small businesses to assist with these types of businesses that have been disproportionately harmed during the pandemic.
- Starting Wednesday, February 24, 2021, at 9 am, the U.S. Small Business Administration (SBA) will establish a two-week (14-day) window where only certain applicants will be allowed to apply. These businesses include businesses and nonprofits with fewer than 20 employees. This will enable lenders to focus on serving these smallest businesses while still allowing enough time after the two-week window for larger applicants to apply and receive their loans before the program expires on March 31, 2021.
- Allow sole proprietors, independent contractors, and self-employed individuals to receive more financial support. The loan calculation formula will be revised for these categories of applicants. New Schedule C filers will be able to calculate their PPP loan amount using the gross income line on their Schedule C form instead of their net profit line. The SBA will also establish a $1 billion set aside for non-employer Schedule C applicants in low and moderate-income (LMI) areas.
- Eliminate an exclusionary restriction that prevents small business owners with prior non-fraud felony convictions from obtaining relief through the PPP, consistent with a bipartisan congressional proposed bill.
- Eliminate an exclusionary restriction that prevents small business owners who are delinquent on their federal student loans from obtaining relief through the PPP.
- Ensure access for non-citizen small business owners who are lawful U.S. residents by clarifying that they may use Individual Taxpayer Identification Numbers (ITINs) to apply for PPP relief.
To achieve higher response rates for the populations being served, the SBA updated their first and second PPP draw applications on February 17, 2021, to move the “PPP Borrower Demographic Information” to the bottom of the first page instead of at the end of the application.
The last day to apply for first and second draw PPP loans is March 31, 2021, and there are no current plans to extend this date. Of the $284 billion approved for PPP funding under the Consolidated Appropriations Act of 2021 enacted on December 27, 2020, over $140 billion has been approved over 1,918,663 loans through February 21, 2021.
We will continue to monitor this situation and provide additional guidance as it is released.
The White House statement on these changes can be found here.
If you have questions about the Paycheck Protection Program or the application process, please reach out to your personal Sciarabba Walker contact or email us at info@swcllp.com.