By: Stephen Mann, CPA, ABV, and Jarit Loughmiller, CPA/ABV/CFF, ASA, CVA, CFE
On Monday, February 22, 2021, the Biden-Harris administration announced changes to the Paycheck Protection Program (PPP) to “provide equitable relief” and increase the availability of the PPP funds to the smallest employers and sole proprietors.
Since the program reopened in January 2021, about $134 billion of the $284 billion has been lent to 1.8 million small business owners. About half of the funds allocated in the 2nd round of PPP remain and will be available through March 31.
This announcement comes as the House lawmakers prepare to vote on Biden’s $1.9 trillion coronavirus relief proposal. The Democratic-backed relief bill making its way through Congress would add additional funding to the Paycheck Protection Program and would make more not-for-profit organizations eligible. Additionally, it would add $15 billion to the EIDL program and create a new $25 billion grant program specific to bars and restaurants. Blue and Co. will continue to monitor this development.
The announcement from the White House states that the administration will do the following:
Enact 14-day period starting Wednesday
Starting Wednesday, February 24, only businesses with fewer than 20 employees can apply for loans – creating a two-week exclusive window for application of PPP funding.
If your business has more than 20 employees, you must apply before Wednesday, February 24, or you will have to wait until after the 14-day period.
Aid sole proprietors, independent contractors, and self-employed individuals
Additionally, the announcement stated that Biden’s team is also carving out $1 billion to direct toward sole proprietors. They are going to modify the calculation of the loan amount to allow these types of businesses to be eligible for larger PPP loans. At this time, the modifications of the loan calculations have not been released.
Eliminate a restriction that prevents small business owners with prior non-fraud felony convictions from obtaining PPP Loans
This provision is included in a bipartisan reform bill named the PPP Second Chance Act.
Eliminate a restriction that prevents small business owners who are delinquent on their federal student loans from obtaining PPP Loans
Currently, the PPP is not available to any business with at least a 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. The SBA will remove the student loan delinquency restriction to broaden access to the PPP.
Allow for non-citizen small business owners who are lawful U.S. residents to be eligible to apply for a PPP loan
The law was clear U.S. residents may access the program, but a lack of guidance from the SBA has created inconsistency in access for ITIN holders like Green Card holders or those here on a VISA. The SBA will provide more guidance in the coming days.
We will continue to monitor this situation and provide updates. As always contact your Blue & Co., LLC advisor, or feel free to contact the authors at:
Jarit (J.T.) Loughmiller, CPA/ABV/CFF, ASA, CVA, CFE