On Monday, Feb. 22, 2021, the Treasury Department announced that it will be making temporary changes to the Paycheck Protection Program to benefit small businesses. Starting on Wednesday, Feb. 24, 2021, and continuing through March 9, 2021, only businesses with fewer than 20 employees – which make up 98% of small businesses – will be able to apply for PPP loans. Per the Biden Administration, these temporary changes are meant to help small businesses, which employ roughly half of all American workers and account for 44% of GDP. The Biden Administration is also revising the program’s loan calculation formula to help independent contractors, self-employed persons, and sole proprietors—such as home repair contractors, real estate agents, and independent retailers—qualify for meaningful PPP loans; under the previous formula many of these applicants were either denied loans or approved for amounts as little as one dollar.
In addition to temporarily limiting applications to only small business owners, the Treasury Department has also announced other changes and developments to encourage applicants in low and moderate income areas. For example, the Small Business Administration intends to provide new guidance clarifying that legal US residents, such as green card holders, may qualify for PPP loans. Other intended changes include allowing business owners who are delinquent on student loans, and certain business owners with non-fraud felony arrests or convictions, to obtain PPP loans.
The program, which provides forgivable and low interest loans to applicants, is currently set to expire on March 31. To date, roughly 1.8 million loans totaling $133.5 billion have been approved by the federal government. If you have any questions concerning the changes to the Paycheck Protection Program, please contact Demetrius Robinson (firstname.lastname@example.org / (614) 427-5749), Melissa Yasinow (email@example.com / 216-736-7205), or any other member of our PPP Compliance Team.