First, some were unable to obtain membership from banks because their the loan amount was too small; lenders do more when they lend more, of course. Others found that when they found a lender to take them on, the amount they qualified for was paltry compared to what they expected. Some would have qualified for only $ 1.
The Biden administration announced today a series of fixes– including a change in the loan formula for sole proprietors and an exclusive lending window for smaller borrowers – which should allow for a more equitable distribution of relief funds. The rebate program, which was relaunched on Jan. 11, has so far granted more than $ 140 billion to approximately 1.9 million small businesses, with an average loan size of $ 73,000.
Here are the latest changes in detail:
- An exclusive 14-day application period, from February 24, for companies and associations with less than 20 employees. The SBA said in a statement that it would still process any requests that lenders had already submitted to the agency before the start of the exclusivity period.
- A change in the PPP loan amount formula for individual businesses, independent contractors and self-employed workers, allowing them to use the gross income line on their Schedule C tax forms. Previously, businesses had to remove taxes and other expenses of the calculation. The SBA is also setting aside $ 1 billion for these types of businesses in low to moderate income communities. The changes are expected to take effect the first week of March.
- The SBA will allow access to the loan program regardless of a borrower’s federal student loan default status. Borrowers who have been convicted of a non-fraudulent felony will also be allowed access to the program, as long as they were not incarcerated at the time of their application. Both changes come into effect the first week of March.
- Immigrant entrepreneurs who legally reside in the United States and pay taxes will also be eligible to apply for PPP loans. This has always been the case, but the Biden administration noted that a lack of guidance from the SBA created an inconsistency in access for holders of an Individual Tax Identification Number (ITIN) like holders. of the green card or people in the United States on a visa.. To ensure this, the SBA notes that it will begin, starting the first week of March, allowing business owners to use their ITIN to apply for the program.
Keith Hall, president and CEO of the National Association of Self-Employed Workers, applauded the changes. “The revised PPP calculation and reforms released today are good news not only for self-employed workers, but also for the countless additional small businesses that will now be eligible to apply for the loans they need to survive during this pandemic in course, “he said in a statement. .
Hall further praised the exclusive lending period for smaller borrowers. But he also argued that there is still a lot to be done to help smaller businesses; he encourages lawmakers to keep pushing for another stimulus package. Currently, members of Congress are negotiating what they plan to include – or given recent upbeat economic news, wondering if more relief is needed. Whatever the outcome, Hall said, with the pandemic and vaccine issues still crowded – as well as the potential for coronavirus variants to thwart a recovery – “this can’t be the end of support for the small business community. “.