Biden Changes PPP Loan to Make It Easier for Smaller and Minority Owned Businesses to Get Funding


The PPP loan has been instrumental in helping many businesses get the funding they needed during the coronavirus pandemic, but others struggled to get approved. This was especially true for smaller businesses that required loans that were so small, many lenders didn’t think it was worth their time. 

Yesterday, the Biden administration announced some changes that would make it easier for small businesses to access loans. The main initiative that the government is launching calls for a two-week window in which the PPP will only be available to companies that have 20 employees or less. This window will go into effect on Wednesday, Feb. 24. 

Here are some other PPP related changes that businesses should know about.

Providing a More Streamlined Process

The White House announced it will be minimizing processing delays caused by anti-fraud prevention measures by working with the SBA to create a more streamlined approval process. In doing so, the following updates are being made. 

  • Key areas of the SBA web site will be updated so applicants get a better understanding of relief options and the application process.
  • Stakeholder outreach will continue to be conducted to provide information concerning the challenges and opportunities created by the emergency relief plans.
  • An initiative will be launched to facilitate communication with lenders so they can access information and ask questions regarding the PPP. This goal is to deal with questions and concerns in a more streamlined manner. 

Modifications to the PPP Loan Amount Formula

Until now, it was difficult for the SBA and government to calculate loans for the self-employed. Loans were usually based on payroll and independent contractors and sole proprietors who did not have a payroll were forced to use their IRS 1040 schedule C which included deductions. This resulted in very low loan amounts. 

The new set of regulations allows self-employed workers to calculate loans based on gross income instead of net profit making it easier for these people to get approved.

The SBA Will Provide Loans to Those with a Student Loan Delinquency Status 

Previously, lenders were excluded from the program because of student loan delinquency and a record of non-fraud felonies. This will no longer be the case. 

Immigrants Who Live in the U.S. and Pay Taxes will Be Eligible

Although U.S. taxpaying immigrants were always eligible for the PPP, there were issues with Green Card holders and people working in the U.S. on a visa. Starting in early March, business owners will be able to use their ITIN numbers to apply for the loan eliminating the obstacles present for some immigrant entrepreneurs.

What You Should Know When You Apply 

Here are some things business owners should know when submitting their applications. 

Applying for a First or Second Draw Loan

Starting Wednesday, businesses with 20 or less employees can apply for a first or second draw PPP loan. If you are applying for a second draw loan, you must have spent or have plans to spend the full amount of the original loan. You must also show that you had at least a 25% drop in revenue in any quarter of 2020. 

Apply Quickly

Two weeks is not a huge window and with limited funding and so many businesses in need, you can expect that money will be going fast. Get ready quickly by gathering your tax documents and speaking to a lender in advance. That way you will be ready to apply as soon as possible.

The SBA reported Monday that it approved more than 1.9 million PPP loans for a total of $40 billion from January 11 to February 21. Once updates are in effect, an additional $284 billion will be made available through March 31. Good luck getting the business funding you need.