PPP Loan Rules Temporarily Changing to Benefit Small Businesses, Sole Proprietors, Independent Contractors
The Biden administration on Monday announced temporary changes to the Paycheck Protection Program (PPP) to make it easier for small businesses to access loans. For two weeks beginning Wednesday, Feb. 24, the Small Business Administration will only accept PPP applications from businesses with fewer than 20 employees.
Initially launched in April 2020, the first round of PPP funding paid out $349 billion in forgivable loans in its first two weeks. A second round of funding was approved in May, but around $130 billion of that $320 billion went unused, expiring in August. In January of this year, the program relaunched with $284 billion in funding, with $150 billion still available.
According to Business Insider, demand for PPP loans is slowing, but the Biden administration said there are a number of small and minority-owned businesses that have not yet received a loan under the program. The two-week change is aimed at encouraging these businesses to apply for PPP loans.
🚨Starting Wednesday, for the next 14 days PPP will only be taking applications from #SmallBiz with fewer than 20 employees. 🚨
This will allow lenders to focus on the smallest of small biz.
— House Committee on Small Business (@HouseSmallBiz) February 22, 2021
The move also revises the program's rules to make it easier to qualify for businesses that could not get previous PPP loans due to business cost deductions. Previous calculations were based on payroll, which hurt sole proprietors and independent contractors seeking loans. The new rules are designed to assist those businesses, many of which are minority-owned, by helping them qualify for higher amounts.
"The initial round of PPP last year left too many minority-owned and mom-and-pop businesses out while larger well-connected businesses got funds quickly," an administration official said, according to Milwaukee Business Journal.
Click here for more details on the current round of PPP for industry businesses, or visit the SBA website for more PPP information and how to apply for a loan.