Main Street Practitioner Blog

Jessica L. Jeane, J.D.
Director of Public Policy & Strategic Communications
February 22, 2021

The Biden administration has announced several reforms to the Paycheck Protection Program (PPP), which are aimed at targeting the PPP more narrowly toward certain small businesses. The White House on February 22 released a Fact Sheet outlining the following changes to be implemented:

• A 14-day period will begin Wednesday, February 24, during which time only businesses with fewer than 20 employees can apply for relief through the PPP. 98 percent of small businesses have fewer than 20 employees, according to the White House. The 14-day exclusive application period will allow lenders to focus on serving these smallest businesses.

• Help sole proprietors, independent contractors, and self-employed individuals receive more financial support by reforming calculation requirements for new applicants.  Of these businesses, those without employees are 70 percent owned by women and people of color. However, many are structurally excluded from the PPP because of how PPP loans are calculated, according the administration. Thus, the loan calculation formula for these particular applicants will be revised so that it offers more relief. Additionally, a $1 billion set aside will established for businesses in this category without employees located in low-and moderate-income (LMI) areas. The SBA has reportedly confirmed that this new calculation will not apply retroactively. “We are not able to retroactively change the loan amount on any PPP loan that has already been approved by a lender and received the federal guarantee," an SBA official said.

• Eliminate an exclusionary restriction that prevents small business owners with prior non-fraud felony convictions from obtaining relief through the PPP.  Currently, a business is ineligible for PPP if it is at least 20 percent owned by an individual who has either: (1) an arrest or conviction for a felony related to financial assistance fraud within the previous five years; or (2) any other felony within the previous year. To expand access to PPP, the bipartisan reforms, which would eliminate the second restriction (the one-year look-back) unless the applicant or owner is incarcerated at the time of the application, will be adopted.

• Eliminate an exclusionary restriction that prevents small business owners who are delinquent on their federal student loans from obtaining relief through the PPP. Currently, the PPP is unavailable to any business with at least 20 percent ownership by an individual who is currently delinquent or has defaulted within the last seven years on a federal debt, including a student loan. Working with the Departments of the Treasury and Education, the SBA will remove the student loan delinquency restriction to broaden access to 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 relief. The SBA is expected to issue guidance in the coming days that otherwise eligible applicants cannot be denied access to the PPP because they use ITINs to pay their taxes.

Additional administrative reforms geared toward ensuring “equitable distribution of relief” are detailed on the White House Fact Sheet here.  The SBA’s PPP Report containing information related to loan approvals through February 21, 2021, can be located here.

The application window for the PPP is scheduled to close on March 31.