PPP Loans Just Became More Accessible to Some

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Changes Trickle out From Washington on PPP2

By Austin Coyan, CPA, CFE

Earlier this week, the Biden-Harris Administration announced updates to the Paycheck Protection Program (PPP) that are aimed at making financial relief more accessible to certain types of businesses.  The administration made clear these changes aren’t a replacement for a future relief package, but rather view this as a needed extension in the meantime.

The administration is planning the following:

  • For 2 weeks beginning February 24, 2021, only businesses with fewer than twenty employees can apply for PPP loans. The intent is to allow lenders to focus on serving smaller main street businesses during this time frame.  This period ends March 10, 2021.  Learn more about the expanded eligibility for the second round of PPP loans, commonly known as PPP2.
  • A revised loan calculation formula for sole proprietors, independent contractors, and self-employed individuals is also planned. These types of businesses experienced difficulty obtaining PPP loans when the program first began.  This move seeks to offer relief to these businesses.  This updated loan calculation form is accompanied by $1 billion in funds set aside for businesses in these categories without employees located in low-and moderate-income areas.
  • Restrictions that prevent small business owners with prior non-fraud felony convictions from obtaining relief through the PPP will be eliminated. Currently, if a business is at least 20 percent owned by an individual who has an arrest or conviction for a felony related to financial assistance fraud within the previous five years or any other felony within the previous year, the business is ineligible for PPP.  This move aligns with the pending PPP Second Chance Act that would eliminate the one-year look-back unless the PPP applicant or owner is incarcerated when applying.  The PPP Second Chance Act is co-sponsored by Senators Ben Cardin (D-MD), Rob Portman (R-OH), Cory Booker (D-NJ), and James Lankford (R-OK).
     
  • The SBA was instructed to clarify an inconsistency for Individual Taxpayer Identification Number (ITIN) holders. It’s clear the PPP is available to all lawful U.S. residents.  However, a current lack of SBA guidance has made it challenging for ITIN holders – such as Green Card and visa holders – to access PPP funds.  The administration instructed the SBA to clarify that applicants cannot be denied for a PPP loan because they use ITINs, rather than a Social Security number, to pay taxes. 

Guidance on PPP1 and PPP2 continues to trickle out of Washington, D.C.  As changes occur, we will continue to keep you up to date.  It’s important to note there’s still a substantial amount of PPP2 funding left for businesses who qualify.  To learn more, contact your business advisor.