The PPP loan period recently underwent several changes to improve access to capital for historically disenfranchised applicants. Effective from 2/24/21, for a period of 14 days, only businesses with fewer than 20 employees can apply for a PPP loan. There were also changes for sole proprietors and self-employed individuals, who can now use their gross income to calculate the loan amount. An additional $1 billion of PPP program funds are being designated for these businesses in low-to-moderate income areas. The revised rules also provide support for ‘second chance’ business owners with non-fraud felony records, business owners delinquent on federal student loans, and businesses owned by non-citizens who are lawful US residents. Further changes are anticipated during the final month of this round of PPP funding, which concludes on March 31, 2021.
Changes to PPP Funding
While the PPP program continues to be an efficient and effective manner in providing assistance to the region’s small business owners, it has been noted that there are some shortcomings that need to be addressed.
Recent Updates
Recently, the Administration announced several additional changes to the current round of PPP funding. The goal of these changes is to provide greater access to capital to applicants that have been historically disenfranchised. This includes the following:
- Effective 2/24/21: For a 14-day period, only businesses with fewer than 20 employees can apply for a PPP loan.
- Effective date not stated:
- Sole Proprietors/Self-Employed: under existing rules, these classes of businesses were required to use Line 31, form 1040, Schedule C (a/k/a “net income”) to calculate the loan amount, which in many instances significantly reduced the amount eligible for funding. Under the revised rule, these classes of business can use “gross income” for this calculation
- An additional $1 billion of the PPP program funds are being designated for these business categories located in low-to-moderate (LMI) areas
- Support for “Second Chance” business owners, which means business owners with felony records that are not linked to fraud will now be eligible for funding
- Business owners that are delinquent on federal student loans will be eligible for PPP funding
- Businesses owned by non-citizens who are lawful US residents (those with VISAs or Green Cards) are now eligible for funding, which means they can use their Individual Taxpayer Identification Numbers (ITINs)
Anticipated Changes
It is anticipated that there will be additional changes during the final month of this round of PPP funding.
Important Information
It should be noted that, to date, the SBA has not published documentation on the above changes. However, this guidance, including specific dates for implementation, will soon be forthcoming. One point to remember that this program “sunsets” on 31 March 2021.
Those individuals who are eligible for the revised PPP Loan Program should speak with their local financial institution both to obtain specific information on the latest changes, but also to be prepared to submit their application as expeditiously as possible in order to meet the deadline for this program.
Question & Answer
Q: What are the recent changes to the PPP loan period?
A: Effective from 2/24/21, for a period of 14 days, only businesses with fewer than 20 employees can apply for a PPP loan. There were also changes for sole proprietors and self-employed individuals, who can now use their gross income to calculate the loan amount.
Q: How much additional funding has been designated for businesses in low-to-moderate income areas?
A: An additional $1 billion of PPP program funds are being designated for businesses in low-to-moderate income areas.
Q: Who are now eligible for PPP funding under the revised rules?
A: The revised rules provide support for ‘second chance’ business owners with non-fraud felony records, business owners delinquent on federal student loans, and businesses owned by non-citizens who are lawful US residents.
