Administration Makes Key Changes to PPPFebruary 22, 2021
On Monday, Feb. 22, the Biden Administration announced forthcoming changes to the Paycheck Protection Program (PPP) designed to target the smallest businesses. Starting today, Feb. 24, and extending for two weeks, only businesses with fewer than 20 employees can apply for PPP loans. This so-called “waiting period” is designed to increase lenders’ focus on the smallest businesses.
The new rule also will make the following changes, however those won’t go into effect until the beginning of March.
- Change the PPP calculation for sole-proprietors, many of whom were excluded from fully reaping the assistance offered through PPP, specifically: Schedule C filers will be able to calculate their maximum PPP loan amount using the gross income on line 7 of IRS Form 1040 Scheule C rather than line 31;
- A $1 billion set-aside for Schedule C applicants that do not have employees and that are located in low- and moderate-income (LMI) areas;
- Eliminate the restriction on small business owners with prior non-fraud felony convictions from obtaining PPP funds;
- Eliminate the PPP loan prohibition against small-business owners who are delinquent on their federal student loans; and
- Allow non-citizen small-business owners who are U.S. residents to use Individual Taxpayer Identification Numbers (ITINs) to apply for PPP loans, clarifying an issue that left many—lenders and borrowers—unclear whether they could apply or be approved for PPP loans.
Please click here for more information on these changes.