February 25, 2021
Small Businesses Benefit from PPP Changes
Since the Paycheck Protection Program (PPP) was launched as part of the CARES Act in March 2020 it has undergone numerous changes and updates. The short timeframe the Small Business Administration (SBA) had to implement the PPP meant the time typically used to develop a comprehensive framework was simply not available. This resulted in many small businesses and organizations missing the opportunity to receive a loan due to confusion, lack of guidance, and inattention from lenders. Since the PPP was re-funded in early 2021, some accessibility issues have been addressed. In fact, it was recently reported by the SBA that through February 21st, there have been 1.3M loans issued to small businesses for loans amounts of less than $50,000. To build upon this, the Biden Administration announced additional changes to the PPP designed to help very small businesses obtain access. To help clients, prospects, and others, Wilson Lewis has provided a summary of the key details below.
Key Paycheck Protection Program Changes
- Exclusive 14 Day Application Period – Beginning on February 24th, for a period of 14 days, the SBA will only accept loan applications from applicants with less than 20 employees. This will provide an opportunity for lenders to specifically address the needs of small businesses while providing applicants access to the information and resources needed to assess options and apply.
- Ensure Access to Non-Citizen Businesses – Under current regulations, any lawful U.S. resident is eligible to apply for a PPP loan. However, issues have arisen for certain individuals that use International Taxpayer Identification Numbers (ITINs) when paying taxes. The lack of clear guidance from the SBA has created inconsistent access for these business owners including green cardholders. As a result, the SBA will soon issue explicit guidance that non-citizen business owners, including those with ITINs, can apply for relief.
- Exclusionary Restriction on Federal Student Loans – The Administration will also eliminate a restriction that prevents small business owners that are delinquent on federal student loans from obtaining relief through the PPP. Under current regulations, a business is not eligible to apply if there is 20% ownership by an individual that is currently delinquent or has defaulted within the last seven years on federal debt, including student loans. Changes will be made to remove the student loan delinquency restriction.
- Expand Access to Sole Proprietors & Self Employed – Due to how loan amounts are calculated in the application process, many sole proprietors, independent contractors, and self-employed individuals have been structurally excluded. To remedy the issue, the Administration will revise the loan calculation formula to ensure broader access. In addition, there will be $1B set aside for these businesses without employees located in low to moderate-income areas.
- PPP Second Chance Act – Under current regulations, a small business owner with a prior non-fraud felony conviction is not eligible to receive a PPP loan. If a business is at least 20% owned by an individual that has an arrest or conviction for a felony related to financial assistance fraud (within the last 5 years) or any other felony within the previous year, they are ineligible. Through the proposed PPP Second Chance Act, the second restriction would be eliminated, unless the owner or applicant is incarcerated at the time of application.
Contact Us
These changes will certainly expand PPP access to small Atlanta and Georgia businesses that have previously been unable to apply for a loan. Since the exclusive application period has already started, it is important to act quickly if you are going to apply. If you have questions about the information outlined above or need assistance with a PPP, tax, or accounting issue, Wilson Lewis can help. For additional information call us at 770-476-1004 or click here to contact us. We look forward to speaking with you soon.
