The smallest of businesses are getting more attention under the Paycheck Protection Program, the Biden administration announced Monday. New rules, taking effect this Wednesday, aim to extend the forgivable loan program to more minority-owned, smaller businesses, and sole proprietors. The PPP was implemented during the beginning of the COVID-19 pandemic to help businesses struggling financially.
Under the changes, small businesses with fewer than 20 employees will have an exclusive two-week window, beginning Feb. 24, to apply for PPP loans. The Biden administration says it hopes the exclusive window will offer smaller businesses a speedier application process. Larger businesses will be unable to apply for funds during that time.
PPP loans will also be calculated differently. Under the former model, PPP loans were calculated on the number of employees with a business. The Biden administration announced that sole proprietors, independent contractors, and the self-employed are eligible for more funding from PPP loans. They’re also opening PPP eligibility to more entities by eliminating restrictions around delinquent student loan debt and non-fraud felony convictions. Some non-citizen business owners also could be eligible to apply.
Ninety-eight percent of small businesses employ fewer than 20 people. However, only 45% have received PPP funding so far, according to the SBA, as reported by CNBC.
“It’s a great idea to make sure that we’re prioritizing small and minority-owned business owners because we saw that they were left out of the process,” Marvin Owens, the chief engagement officer of Impact Shares and former senior director of economic development at the NAACP, told CNBC. “What you saw in the beginning of PPP was really a revealing of the disparities around access to capital.”
The PPP is administered by the Small Business Administration. Learn more.