Question of the Week
PPP Revamped to Benefit Smallest Businesses
Happy Friday everyone!
If you own one of the nation’s smallest businesses—say a sole proprietorship or a firm with only a handful of employees—you may not have gotten much help to date from the Paycheck Protection Program (PPP). That’s despite the fact that firms with fewer than 20 employees make up 98% of small businesses. But this week, the Biden-Harris administration announced changes that should address that situation. Here’s what you need to know.
The administration is proposing five key changes.
- A two-week application period just for small businesses. Starting this past Wednesday and through March 9th, the administration will only allow business with fewer than 20 employees to apply for relief. The 14-day period will allow lenders to focus on serving these smallest businesses.
- More help for sole proprietors, independent contractors, and self-employed individuals. The Biden-Harris administration is reviewing the loan calculation formula for sole proprietors, independent contractors and the self-employed. While we don’t have the details on the new calculation, this will be a very important change. The administration points out that 70 percent of businesses without employees are owned by women and people of color. The administration will also set aside $1 billion for business in this category without employees located in low and moderate-income (LMI) areas.
- Reduced barriers for former felons. The administration plans to increase access to applications who have either: (1) an arrest or conviction for a felony related to financial assistance fraud within the previous five years; or (2) any other felony within the previous year. This would be consistent with the bipartisan PPP Second Chance Act that was proposed on Friday.
- Assistance for business owners who are late on student loans. The administration will also increase access to business owners who are currently delinquent or have defaulted within the last seven years on a federal debt, including a student loan.
- More access for business owners who aren’t U.S. citizens. New provisions would allow non-citizen small business owners who are lawful U.S. residents to use Individual Taxpayer Identification Numbers (ITINs) to apply for relief. In addition, the administration will allow access to PPP for lawful US residents with an ITIN like Green Card holders and those here on a visa. The SBA will address this inconsistency by issuing clear guidance in the coming days that otherwise eligible applicants cannot be denied access to the PPP because they use ITINs to pay their taxes.
Quote of the Week
“This is a new year. A new beginning. And things will change.” ― Taylor Swift
Tasks of the Week
Stay tuned! There are still a lot of questions on how all of these moving pieces will fit together, especially with the first tax deadline being less than two months away. But overall definitely exciting news. More details to come.