Biden to announce changes to PPP loan program, with focus on smallest businesses
President Joe Biden will announce changes to the Paycheck Protection Program (PPP) Monday afternoon that include a two-week window that only companies with fewer than 20 employees can apply for credit, as well as improvements to focus more on equity.
The program received $ 284 billion in small business lending as part of the $ 900 billion COVID-19 relief package in December and reopened to lenders and borrowers on January 11.
Administration officials say the Small Business Administration approved approximately $ 134 million in indulgent small business loans to approximately 1.8 million small businesses in the first month for an average loan size of approximately $ 74,000. About 80% of these loans went to companies with fewer than 10 employees.
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If passed, Biden's $ 1.9 trillion US bailout plan, which could be voted on in the House of Representatives by the end of the week, would add another $ 7 billion to the program.
PHOTO: FILE - In this file photo dated February 19, 2021, President Joe Biden speaks after touring a Pfizer manufacturing facility in Portage, Michigan (Evan Vucci / AP).
One of the improvements that Biden will announce on Monday is a 14-day period starting on Wednesday at 9:00 a.m. CET, during which only companies with fewer than 20 employees can apply for relief. That ends on March 9th at 5 p.m. ET. Administrative officials said this would allow lenders to focus on the smallest businesses.
In order to improve an equitable distribution of the credit, administration officials said changes would also aim to help sole proprietorships, independent contractors and the self-employed gain more financial support by revising the program's funding formula. Of these companies, 70% of those without employees are owned by women and black people, and previous PPP calculations show that some have been approved for as little as $ 1 in loans. At least $ 1 billion will also be allocated to companies in this category.
Officials said the Small Business Administration will revise the credit calculation formula to match the approach approved by Congress in the Economic Assistance to Smallholder and Ranchers Act.
MORE: Luxury hotels benefited from PPP loans. So do the investment trusts that own them
Biden will also remove restrictions preventing small business owners with previous convictions for fraudulent crimes from receiving relief from the PPP and preventing small business owners who have defaulted on their federal student loans from receiving relief.
The president tries to make it easier for those with green cards or a visa to help. Administrative officials said small business owners legally resident in the United States could use individual tax identification numbers (ITNs) to file an application.
Officials said they are closely monitoring the flow of money and are not currently asking Congress to extend the program's expiration date to March 31.
Biden announced changes to the PPP loan program, with a focus on the smallest businesses originally posted on abcnews.go.com
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