The Biden administration on Monday announced a series of changes to the Paycheck Protection Program that are aimed at improving access to federal COVID-19 relief loans for small and minority-owned businesses.
The first change takes effect at 9 a.m. Wednesday when a 14-day exclusive application period opens for businesses and nonprofits with fewer than 20 employees. PPP applications already submitted by lenders will still be processed by the U.S. Small Business Administration.
A second revision aims to open more lending for sole proprietors, independent contractors and self-employed workers by revising the loan calculation formula and setting aside $1 billion for small businesses that don’t have employees and are located in low- and moderate-income areas.
Additional reforms eliminate restrictions on small business owners with prior non-fraud felony convictions and business owners who are delinquent on federal student loans from accessing PPP loans.
The additional reforms take effect next week as more guidance is issued, while the current loan application period expires on March 31.
“The SBA is a frontline agency working to create an inclusive economy, focused on reaching women-owned, minority-owned, low- and moderate-income, rural, and other underserved communities in meaningful ways. While reported data illustrates we have made real strides in ensuring these funds are reaching underserved communities, we believe we can still do better,” SBA Senior Advisor Michael Roth said in a statement.
Small Business Association of Michigan President Brian Calley said he is particularly interested in the revisions that should open more funding for sole proprietors and independent contractors who may have been ineligible for funding in prior PPP rounds with payroll-tied loans.
“I’m hopeful that will make a big difference,” Calley said Monday during an SBAM member briefing.
The latest round of PPP funding opened last month following two separate loan periods in 2020. The SBA has approved more than 1.9 million loans in the latest round totaling more than $140 billion.
In Michigan, 51,097 loans totaling more than $4.7 billion have been approved as of Feb. 21. Nearly 72 percent of PPP loans this year were for less than $50,000.
The largest share of loan amounts — $25.4 billion, or 18 percent — have gone to “accommodation and food services” businesses, followed by the construction sector at $18.7 billion, according to the SBA.
News coverage in the small business section of MiBiz is made possible by advertising support from the Small Business Association of Michigan. SBAM is the statewide and state-based association that focuses solely on serving the needs of Michigan’s small business community. This advertisement has no effect on editorial consideration in MiBiz.