WASHINGTON – President Biden on Monday announced changes to the federal government’s coronavirus relief program for small businesses, with the aim of improving access for very small businesses and those owned by minorities or located in communities underserved.
As part of the changes, the Small Business Administration will accept paycheck protection program applications exclusively from businesses with fewer than 20 employees for 14 days starting Wednesday, Biden said.
The changes “will ensure that we are looking after family businesses even more than we have already done,” Biden said.
The PPP, which offers forgivable loans to small businesses to help them weather the economic impacts of the coronavirus pandemic, reopened in January after being closed since August. Loans are issued by lenders and backed by the SBA.
PPP applicants with fewer than 20 employees will be able to apply exclusively from 9 a.m. ET Wednesday until 5 p.m. ET on March 9, an administration official said.
The entire program is scheduled to end on March 31.
The exclusive window “will give lenders and community partners more time to work with these main street businesses that anchor our neighborhoods and help families build wealth, while ensuring that large P3-eligible businesses will still have enough.” over three weeks to apply and receive support before the program expires, ”the official said.
Last year, the PPP came under public scrutiny as very small businesses and those without existing banking relationships initially struggled to access the program. Advocacy groups and others have also raised concerns about the ability of the program to reach minority and underserved communities.
Paycheque Protection Program Problems
The SBA under the Biden administration and the Trump administration stressed that community lenders are essential to ensure the program reaches a range of businesses, including those that do not have strong ties to traditional banks. As part of the reopened program, community and smaller lenders provided PPP loans exclusively in the early days, a measure the SBA said it had implemented to boost the participation of minorities, women, veterans and others. underserved communities.
Mr Biden announced other changes to improve access for sole proprietors, independent contractors and self-employed people, including how they calculate their loan amounts.
Administration officials said they heard from applicants who were approved for loans of just $ 1 because the rules require them to calculate the loan amount using the net profit shown on their tax returns. These applicants will now be able to calculate their loan amount using gross income.
The SBA will also set aside $ 1 billion in program funding for jobless applicants who are also in low and moderate income communities, the official said.
Other planned changes include granting more access to the program to applicants convicted of non-fraudulent crimes, in line with a bipartisan proposal from Sens. James Lankford (R., Okla.), Rob Portman (R., Ohio), Ben Cardin (D., Maryland) and Cory Booker (D., NJ). The administration official said the SBA will also work with the Treasury and Education departments so that borrowers who have recently defaulted or are behind on federal student loan payments are not prevented from receiving PPP loans.
Congress provided $ 284 billion for the latest round of PPP, as part of its coronavirus relief plan adopted in December. As of Feb.21, less than half of those funds were depleted, according to agency data, as the SBA had approved about $ 140.3 billion in loans since the program reopened on Jan.11.
Agency data as of Feb. 18 shows that about 25% of the reopened program’s loan volume has been approved to applicants in low- and moderate-income communities. About 94% of loans approved were for amounts under $ 250,000, which the SBA says is a sign that the program is reaching smaller borrowers.
Meanwhile, new fraud protection measures delayed the processing of loan applications in the last PPP cycle, lenders said. The locks are the result of flags the SBA has placed on the files of approximately 240,000 initial PPP recipients for issues ranging from write errors to indications of possible wrongdoing.
The Consumer Bankers Association applauded the changes announced on Monday but called on the SBA to resolve the delays.
Without addressing the issues, “this two-week window will not fundamentally change the barriers businesses face,” said Richard Hunt, group chief executive, in a statement. “It’s like giving everyone a train ticket on an unfinished railroad.”
The SBA said it is working with lenders to resolve blockages, including giving them increased power to certify applicants are eligible for the program.
Write to Amara Omeokwe at [email protected]
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