On Monday, President Joe Biden of the United States unveiled improvements to the key US coronavirus assistance program for small businesses to try to meet smaller, minority-owned companies and sole proprietors left behind in previous aid rounds.
Biden administration officials said that the Small Business Administration would only accept applications for forgivable Paycheck Protection Program (PPP) loans from businesses with less than 20 workers for two weeks beginning on Wednesday to ensure that they are not squeezed out by larger companies.
“Small businesses are the engines of our economic progress. They’re the glue and the heart and soul of our communities,” Biden said Monday in announcing the changes. “But they’re getting crushed.”
The reforms come as small business bankers claim that as businesses restart, demand for Paycheck Security loans is slowing. A fact sheet detailing the reforms on Monday morning was published by the White House.
When the PPP was released in April 2020 under a $3 trillion relief bill at the height of coronavirus lockdowns, the initial $349bn ran out in two weeks. In May, Congress funded another $320bn, but the program expired with around $130bn in remaining funds in August.
On January 19, the program was relaunched with $284bn in new funds from a coronavirus aid bill passed at the end of December, and a Biden administration official said there is still around $150bn of PPP money remaining.
But Biden administration officials said that in low-income regions, there are still many minority and very small businesses that have been unable to obtain assistance.
The amendments aim to make it easier for businesses with no employees-sole proprietors, independent contractors, and self-employed individuals such as house cleaners and personal care providers-that could not previously qualify due to deductions in business costs.
The Small Business Administration would amend the rules to fit the method used to allow help to be obtained by small farmers and ranchers, the companies said.
The officials said the initiative would also set aside $1 billion for low and moderate-income companies without jobs, which are 70% run by women and people of color.
New guidelines will be issued by the SBA, making it clear that legal US residents who are not citizens, such as holders of green cards, should not be excluded from the scheme. The Biden Administration would also remove exclusions that restrict enrollment in the program by a company owner who is overdue on student loans.
Company owners in the past year of non-fraud criminal arrests or convictions are disqualified. Biden administration officials said, however, that they would follow Senate bipartisan legislation to lift this limitation, unless the applicant is already in jail.
The Biden administration is also enhancing the program’s operations by strengthening and streamlining fraud controls, revamping the loan application and government websites that connect with small businesses, communicating more about their concerns with borrowers, and deepening the partnership of the government with lenders, according to the White House fact sheet.