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New PPP Changes for the Smallest of Small Businesses

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On Monday, February 22, 2021, the United States Treasury announced recent changes to the Paycheck Protection Program (PPP) that have been adopted to ensure that the “smallest of small businesses” gain access to this important federal relief program. Originally conceived to help small businesses survive the unprecedented economic challenges caused by the COVID-19 pandemic, PPP has evolved over time, providing essential relief to businesses through the distribution of funds in two rounds (First Draw and Second Draw).
 
However, the concern is that, until now, many of the businesses receiving the funds have not represented the small and mid-sized, family-owned companies and minority-owned businesses that were intended to be among the primary targets for the funds.
 
To address this disparity these changes have been announced:
  • Beginning on February 24, 2021, those businesses with more than 20 employees will be omitted from participating in the PPP program for a two-week period in order to keep the focus on smaller, previously overlooked companies. 
  • There will be permanent changes to the loan calculation formula as it applies to independent contractors in order to increase their payouts.
  • The application procedures will be changed to make it easier for non-citizen business owners who are legal residents of the United States to receive loans.
  • The rules that kept borrowers with past felony convictions and people who have defaulted on student loans from applying will be eliminated.
 
The SBA reported that it approved 1.8 million loans for a total of $133.5 billion through February 18, 2021. Adding in PPP applications submitted to the SBA but not yet processed, the totals grow to nearly $2 million loans for $154.1 billion. The application window for the $284 billion program is scheduled to close on March 31, 2021.
 
Please note, we will continue to keep you informed as more information is released and questions that arise are clarified. While there has not yet been any word as to whether the program will be extended after March 31, 2021, it is anticipated that the Treasury Department will continue to support the program at least in the short term, while being committed to distributing the funds in a more equitable manner.
 
If you have any questions, please feel free to contact us at covid-19@sobelcollc.com.
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