President Biden announced on Monday changes to the Paycheck Protection Program (PPP) that are designed to improve access to loans for very small companies and nonprofit organizations.
As part of the changes, the Small Business Administration (SBA) will accept applications for PPP loans exclusively from companies with fewer than 20 employees for the next two weeks, until March 9, Biden said.
“These small businesses — not the ones with 500 employees, but these small businesses that, with a handful of folks, they are 90 percent of the businesses in America,” Biden said this week. “But when the Paycheck Protection Program was passed, a lot of these mom-and-pop business just got muscled out of the way by bigger companies who jumped in front of the line.”
The White House has instructed SBA to work with lenders and small business owners to ensure that small businesses take maximum advantage of this two-week window. About 98 percent of small businesses have fewer than 20 employees. Biden also announced as part of the changes that the program’s loan calculation formula is being revised so independent contractors, self-employed individuals and sole proprietors have a better chance of getting the loans.
According to the administration, more than 5 million businesses got PPP loans totaling $525 billion last year. Congress allocated $284 billion for another round of loans in December, $134 billion of which has been awarded. The PPP is set to expire at the end of March.
Associations or nonprofit groups with more than 20 employees that applied for the PPP before Wednesday will still have their application processed. Those with more than 20 employees still considering a PPP loan will have a short window to get their applications filed between March 9 and the end of the month.