Smallest Businesses Can Now Go to Front of Lending Line
The White House will give the very smallest businesses a chance to cut in line for pandemic relief loans, announcing Monday that for two weeks the Paycheck Protection Program (PPP) will only accept applications from companies with fewer than 20 employees.
The special two-week period, which starts Wednesday, is one of a number of steps meant to make up for past problems with the program, designed for small businesses having financial trouble because of the COVID-19 pandemic. Mom-and-pop businesses “got muscled out of the way by bigger companies” when the PPP was first launched last spring, President Joe Biden said in a speech Monday, and this will give a higher priority to those smallest businesses—many of which are owned by minorities—before the latest round of funding ends on March 31.
“These changes will bring much needed long overdue help to small businesses who really need help staying open, maintaining jobs, and making ends meet,” Biden said at the Eisenhower Executive Building, specifically mentioning even one-person businesses like home repair contractors and beauticians. Some 98% of small businesses have fewer than 20 employees, according to the White House.
The current round of PPP funding, up to $284 billion, provides up to $10 million to companies with no more than 300 employees that have lost at least 25% of their revenue between comparable quarters in 2019 and 2020.
Biden will also make the loans accessible to business owners with less than spotless records, removing prohibitions on loans to those behind on their federal student loan repayments, and those with histories of non-fraud felony convictions.
Additional PPP changes are aimed at bringing stronger oversight to a program that has been ripe for abuse: Approximately $3.6 billion in PPP loans have gone out to potentially ineligible recipients, according to a January analysis by the Small Business Administration’s Office of the Inspector General, an internal government watchdog. Though less restrictive in terms of eligibility than before, new PPP applications will have to pass fraud checks and other safeguards.