The White House released changes to the latest round of the Paycheck Protection Program (PPP) that are intended to benefit small businesses and promote equitable access to relief.

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February 23, 2021

Biden Administration Announces PPP Revisions Targeting Small Businesses

Yesterday, the White House released changes to the latest round of the Paycheck Protection Program (PPP) that are intended to benefit small businesses and promote equitable access to relief. 

Here are five key components of the revisions:

14-Day PPP Small Business Application Process 

Starting Wednesday, February 24, only businesses with fewer than 20 employees will be allowed to apply for PPP for a two-week period. This will allow lenders to focus on the 98% of U.S. small businesses that have 20 or fewer employees.

PPP Funding Support for Sole Proprietors, Independent Contractors & Self-Employed

The Biden administration will be revising the loan calculation formula for sole proprietors, independent contractors, and self-employed individuals so they may receive more financial support. Many of these businesses, such as beauticians, independent retailers, and home contractors, previously were structurally excluded from PPP or received very little funding. One billion dollars will be allocated to businesses in this category, with an additional focus on low- and moderate-income (LMI) areas. 

Elimination of PPP Exclusionary Restrictions

Two exclusionary restrictions will be eliminated in this round of the PPP application process. The first a restriction that prevented small business owners (at least 20% ownership) with prior non-fraud felony convictions from obtaining PPP relief. The administration will adopt bi-partisan reforms included in the PPP Second Chance Act to allow small business owners with a felony conviction within the past year unless the applicant or owner is incarcerated at the time of the application or had an arrest of conviction for a felony related to financial assistance fraud.

The second eliminated exclusionary restriction relates to small business owners who are delinquent on their federal student loans. Previously, PPP was not available to any business with a least 20% ownership by an individual who was delinquent or defaulted on a federal loan within the past seven years. This eliminated millions of Americans, including a disproportionate amount of Black borrowers from participating in the PPP program. The Departments of Treasure and Education will work with the SBA to remove loan delinquency restrictions and expand access to PPP funding.  

Elimination of Fraud & Abuse in PPP

As seen in many news headlines last year, the first PPP rollout did not include many checks or balances for potential fraud. Under the second round of PPP, the Biden Administration is working to address waste, fraud, and program abuse making loan approval contingent on passing SBA fraud checks, the Treasury’s Do Not Pay database, and public records. The SBA also is now manually reviewing large loan applications and random sampling smaller loans to ensure taxpayer dollars are allocated fairly.

Transparency & PPP Application Process Improvements

The PPP application has been revamped to encourage self-reporting on demographics for better insight on the program’s impact across various population segments. Additionally, key areas of SBA websites are being updated to help more applicants find resources, better understand the relief options available, and more easily complete the PPP application process.

For More Information on the Latest PPP Revisions

Additional revisions and improvements to the PPP process can be found in the White House Fact Sheet published February 22, 2021.

We are happy to discuss how this may impact your AccountingBookkeeping, and/or Business Tax Planning.

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