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PPP Update: Temporary Changes to Increase Lending to Small Businesses and Sole Proprietors



This week, the Biden-Harris administration announced a number of reforms to the Paycheck Protection Program (PPP) aimed at increasing lending to small businesses and sole proprietors, as detailed further in this fact sheet released by the White House. These reforms include:

  • A 14-day period beginning Wednesday, February 24, 2021 and ending March 10, 2021, during which only those businesses with less than 20 employees can apply for a PPP loan. According to the White House release, 98% of small businesses have fewer than 20 employees and while the share of PPP funding going to smaller business, businesses in rural areas, and minority-owned businesses is rising, the two-week exclusive period and related efforts aims to further increase the share of PPP loans going to these smaller businesses.
  • Revising the loan amount formula for sole proprietors, independent contractors, and self-employed individuals, allowing such borrowers to use the gross income line on Schedule C of their tax returns for purposes of calculating maximum available funds. Previously, many small businesses were excluded from receiving PPP funding because of the requirements to exclude taxes and other expenses.
  • Setting $1 billion in PPP funds aside for sole proprietors, independent contractors, and self-employed individuals in low and moderate-income areas.
  • Eliminating certain exclusionary restrictions, allowing small business owners with prior non-fraud felony convictions to access PPP funds, and removing the restriction on delinquent student loan borrowers accessing PPP funds.
  • Permitting use of ITIN numbers to apply for relief, clarifying that Green Card holders and other permanent residents are eligible to receive PPP loans.

In addition, the fact sheet outlines certain other transparency, accountability, and lender engagement initiatives to be addressed on an ongoing basis. This includes further work to address waste, fraud, and abuse across federal programs, including the PPP; encouraging self-reporting of demographic data with a revamped PPP application; updating the SBA website to make it easier for applicants to find resources on relief options; engaging stakeholders to learn about the challenges small businesses are facing and how these issues can be addressed by relief programs; and launching a new initiative to increase the opportunity for lenders to ask questions and provide recommendations about the PPP.

If you have questions regarding eligibility for the PPP program, recent reforms, or existing SBA guidance, our team would be happy to help.

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