On February 22, the Biden administration announced several reforms that will make it easier for small businesses, including independent contractors and sole proprietors, to obtain forgivable PPP Loans.
Starting tomorrow (Wednesday, February 24), and ending 14 days later on March 10, applications for PPP loans will be limited to businesses with fewer than 20 employees. This means that only those businesses with fewer than 20 employees will be permitted to apply for a PPP loan. This 14-day exclusive application period will allow lenders to focus on serving these smallest businesses. Reforms include the following:
- Revisions of Loan Calculation Formula. The Administration indicated that it will revise the loan calculation formula for these applicants so that they will more likely qualify for a PPP loan. Most significant, for certain taxpayers, the revised calculation may employ the gross income vs. net profit formula previously used by farmers and ranchers, which is more beneficial to the applicant and more likely to result in a PPP loan. According to the White House, many small businesses have been mathematically excluded from the PPP program or were approved for as little as $1 because of how PPP loans are calculated.
- Removal of Restrictions on Eligibility due to Certain Felony Convictions. The Administration indicated that it is eliminating an exclusionary restriction that prevents small business owners with prior non-fraud felony convictions from obtaining relief through the PPP program.
- Removal of Restrictions on Eligibility due to Student Loan Delinquencies. The Administration is eliminating an exclusionary restriction that prevents small business owners who are delinquent on their federal student loans from obtaining relief through the program.
- Ensure Access for Non-Citizens. The Administration will allow non-citizen small business owners, such as Green Card holders, who are lawful U.S. residents to apply for relief by supplying their ITINs.