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Biden made changes to the Paycheck Protection Program on Monday to ensure equitable access to small business relief.
The changes included a 2-week period for only businesses with under 20 employees to apply to the program.
The SBA will also work to ensure access to those with student loan debt and/or unrelated prior felony charges.
To help the smallest businesses in the country facing financial hardships, President Joe Biden announced on Monday that he will implement changes to provide more equitable access to the Paycheck Protection Program (PPP).
The first round of PPP loans closed in August, and in December, Congress added funding that allowed the second round of PPP loans to open on January 13.
According to a White House fact sheet released on Monday, funding for businesses with fewer than 10 employees is up by 60% compared to last year, while funding to businesses in rural areas is up by 30%, and funding distributed through Community Development Financial Institutions and Minority Depository Institutions is up by more than 40%.
The remaining funds will be available for distribution through March 31.
The changes to the PPP that the president announced on Monday, which included prioritizing businesses with less than 20 employees and expanding the program's access to underserved communities, are intended to build on the program's demonstrated improvements.
"Getting our economy back means bringing our small businesses back," Biden said in an announcement on Monday. "And that's what we're going to do and that's what I'm doing today."
—The White House (@WhiteHouse) February 22, 2021
Here are the five specific changes Biden made to the PPP:
(1) Instituting a 2-week period where only businesses with under 20 employees can apply for the program
To further target small businesses aid, Biden will institute a 14-day period, from February 24 to March 10, where only businesses with 20 employees and under will be allowed to apply for the PPP to "allow lenders to focus on serving these smallest businesses."
The fact sheet says 98% of small businesses have fewer than 20 employees, and that they are the "Main Street businesses that anchor our neighborhoods and help families build wealth."
Those businesses often struggle more than larger businesses in accessing relief, according to the fact sheet, which is why the two-week period will be implemented to ensure targeted aid.
(2) Providing more funding for sole proprieters and self-employed individuals
With many businesses without employees being structurally excluded from the PPP's loan calculations, the president's new changes will revise the loan calculation formula to ensure it includes sole proprieters, self-employed individuals, and independent contractors.
Also, $1 billion will be set aside for businesses in that category located in low and moderate income areas.
(3) Eliminating the restriction that prevents small business owners with non-fraud-related felonies from receiving PPP aid
According to current PPP requirements, a business is ineligible for the program if the owner has had an arrest or felony conviction related to financial assistance fraud in the last five years, or any other felony within the previous year.
To expand PPP access, Biden will adopt provisions in the bipartisan PPP Second Chance Act, which would eliminate the second felony restriction.
"Anyone who has rebuilt their life after being incarcerated should be celebrated and supported," Sen. Ben Cardin of Maryland, one of the co-sponsors of the bill, said in a statement. "Congress created PPP to help all small businesses keep their employees on payroll, and there is no reason why a business owned by someone with an unrelated criminal record should be treated any differently."
(4) Eliminating the restriction that prevents small business owners with student loan debt from receiving PPP aid
Business owners who are delinquent on a federal debt in the last seven years, including student loan debt, are currently ineligible to apply for the PPP.
With millions of Americans holding student loan debt, Biden called on the Small Business Administration to work with the Depts. of Treasury and Education to remove the student loan delinquency restriction, meaning that those who are late on paying back their loans will not be cut out of PPP eligibility.
(5) Ensuring access for non-citizens who are lawful residents to apply for PPP relief
While the PPP requirements specify that any lawful US resident can access the program, a lack of guidance from the SBA created inconsistencies for those using Individual Taxpayer Identification Numbers, making it difficult for them to get relief.
Biden directed the SBA to make clearer guidance so all eligible applicants will not be denied access to the PPP.
"We will ensure every dollar is spent well," Biden said on Monday. "These changes will bring much-needed, long overdue help to small businesses who really need help staying open, maintaining jobs and making ends meet."
Read the original article on Business Insider