Stock Markets6 hours ago (Feb 22, 2021 02:40PM ET)
By David Lawder
WASHINGTON (Reuters) – President Joe Biden on Monday launched changes to the U.S. coronavirus aid program for small businesses to try to reach smaller and minority-owned firms, sole proprietors and those with past criminal records left behind in previous rounds of aid.
For two weeks starting on Wednesday, the Small Business Administration will only accept applications for forgivable Paycheck Protection Program (PPP) loans from firms with fewer than 20 employees.
“A lot of these mom and pop businesses got muscled out of the way by bigger companies who jumped in front of the line” in the initial rounds of the program, Biden said.
His PPP changes https://www.whitehouse.gov/briefing-room/statements-releases/2021/02/22/fact-sheet-biden-harris-administration-increases-lending-to-small-businesses-in-need-announces-changes-to-ppp-to-further-promote-equitable-access-to-relief also aim to allow more single-person businesses — sole proprietors, independent contractors, beauticians and others — to get loans. Many of these were excluded previously because the program was geared towards firms with traditional payrolls, or because their business cost deductions limited them to only nominal loan amounts, administration officials said.
They added that SBA rules will be changed to match the approach used to allow small farmers and ranchers to receive aid.
The changes announced by Biden are only good through the program’s expiration at the end of March. He has proposed $7 billion more in PPP funding for small businesses in his $1.9 trillion American Rescue Plan now under debate in Congress.
Bankers say demand for PPP loans is slowing as firms reopen.
When the PPP was launched in April 2020 at the height of coronavirus lockdowns, its initial $349 billion ran out in two weeks. Congress approved another $320 billion in May, but that round expired in August with about $130 billion in unused funds.
The program was re-launched on Jan. 19 with $284 billion in new funds from a coronavirus aid bill passed at the end of December, and a Biden administration official said about $150 billion of PPP money is still available.
Biden said he is open to ideas to make his $1.9 trillion aid plan “better and cheaper” but added that small businesses must be supported.
Republican Senator Marco Rubio, an architect of the initial PPP aid program, urged the Biden administration to work with Republicans and Democrats in Congress on changes to the program.
“No other federal relief program has done more to help our smallest businesses, especially those in underserved and under-banked communities,” Rubio said in a statement.
The Biden administration said the program will also set aside $1 billion for businesses without employees in low- and moderate-income areas, which are 70% owned by women and people of color.
The SBA will provide new guidance making it clear that legal U.S. residents who are not citizens, such as green card holders, cannot be excluded from the program. Exclusions for business owners with past non-fraud felony convictions and student loan delinquencies also will be lifted.
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