Small businesses move to front of the line for PPP Loans in an effort to help the Mom & Pop local stores survive. As of February 24, 2021, the SBA will establish a 14-day, exclusive PPP loan application period targeted for small businesses. Specifically the loan period is designated for small businesses and nonprofits having fewer than 20 employees. This should give lenders and community partners additional time to work with the smallest businesses to submit their applications. It should also ensure that larger PPP-eligible businesses will still have plenty of time to apply for and receive support. This program expires on March 31, 2021. In addition, these small businesses will be able to base their loans on gross income. Although details are scarce, sources have indicated loans are available based on the monthly gross income averages, not net profits.
To help small businesses move to front, the SBA will:
- Allow sole proprietors, independent contractors, and self-employed individuals to receive more financial support. Moreover, the SBA plans on revising the PPP’s funding formula; and
- Eliminate an exclusionary restriction on PPP access for small business owners with prior non-fraud felony convictions. Correspondingly, this is consistent with a bipartisan congressional proposal; and
- Eliminate PPP access restrictions on small business owners who have struggled to make student loan payments. In other words, the SBA will eliminate student loan debt delinquency as a disqualifier to participating in the PPP; and
- Ensure access for non-citizen small business owners who are lawful U.S. residents. The SBA will clarify that owners may use an Individual Taxpayer Identification Number (ITIN) to apply for the PPP loan.
Regarding the latest round of PPP loans, a critical goal was to reach small and low- and moderate-income (LMI) businesses. Specifically businesses who haven’t received the relief a forgivable PPP loan provides. Congress provided a $15 billion set-aside for small and LMI first draw borrowers.
With the existing policies in place, the current round only was able to give $2.4B to small LMI borrowers. This was in part because a disproportionate amount of funding went to firms with 20 or more employees. The “less than 20” exclusivity period, combined with the new changes in policy should help achieve Congressional goals – and get the money to those who need it most.
Please contact this office if you have questions.
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