What Small Businesses Need to Know About PPP in Early 2021

The Biden Administration recently adopted significant changes to the Paycheck Protection Program (PPP), which helps businesses who have been impacted by COVID-19 to receive forgivable loans. These changes included a two-week window where only the smallest businesses can apply and other ways to help disadvantaged companies to receive aid.

During the February 25 Small Business Update, Jeanette Mulvey, Content Director at CO—, spoke with White House National Economic Council Deputy Director Bharat Ramamurti and U.S. Chamber of Commerce Executive Vice President and Chief Policy Officer Neil Bradley. This discussion included topics including coronavirus relief for small businesses, PPP loans, minority-owned businesses, women-owned companies, grants for shuttered live venues, and more.

Read below for some of the top highlights.

Two-Week Exclusivity Window for Small Business PPP Applications

The SBA created a two-week window for small businesses where only companies with fewer than 20 employees can apply. The window takes place between February 24 and March 9, 2021, and it should help the smallest companies get relief more quickly.

“98% of businesses in this country have fewer than 20 employees,” Ramamurti said. “And what we've seen in previous rounds of small business relief since this pandemic started is that getting to those very small businesses has been hard. We all know that some of these small businesses don't necessarily have lawyers and accountants on staff. … Our hope is that with a concerted effort from lenders and the administration generally, we can get the word out to these businesses that there's an opportunity to apply for PPP [and] that we can get you relief quickly.”

Help for Minority-Owned Businesses

The SBA's new two-week exclusivity PPP application period should provide more chances for minority-owned businesses to apply for aid.

“Based on the data about minority-owned businesses, they tend to be self-employed or smaller employers,” Bradley said. “Focusing the next two weeks on employers with fewer than 20 employees and making the change for the self-employed, those are two things that are going to help minority businesses. ... The rules are the same across the board. But when you think about the people who maybe haven't been able to access the program, such as the self-employed, it really didn't match their economic needs.

Changing the PPP Loan Formula for Sole Proprietors

Another major change introduced recently is the loan size that sole proprietors and independent contractors are eligible to receive. The SBA will let them apply for PPP loans based on their gross income on their Schedule C forms instead of net income.

“The way PPP worked previously for sole proprietors was that some were ineligible altogether, and others were only eligible for a very small amount of relief because of how it was calculated,” Ramamurti said. "We announced changes to broaden eligibility and to make sure your PPP loan amount is based on your gross income in your tax bill, which will provide much more support for these categories of businesses."

Expanding PPP Access to More Business Owners

Ramamurti also noted that the new changes will make sure more business owners will have a chance to apply for PPP loans, including immigrant entrepreneurs and those with non-fraud felonies and student loan delinquencies.

“We took several steps that are intended to get rid of restrictions that are unnecessary and blocking relief from people who deserved it,” Ramamurti said. "The first one is that the law is clear — any legal U.S. resident can apply for PPP including green-card holders and people with visas. We have clarified that if you are a U.S. resident and non-citizen, you don't need a Social Security number to apply. Secondly, under PPP, if you are in delinquency or default on your student loans, you'd be restricted from applying, so we are moving to get rid of it. We want to make sure business owners get relief, and it doesn't help repay anyone's federal student loans if they lose their business at the same time. Number three, there was a restriction in place that anyone who had convicted of a felony was barred from participating in the program. We've [changed that so] if you have served your time, you can participate in PPP."

Apply for Aid Quickly Before It Runs Out

Bradley said that it's vital for businesses to apply for first and second-draw PPP loans as soon as possible.

“If you have fewer than 20 employees, take advantage of this window between now and March 10,” Bradley said. “If you have more than 20 employees and you want to take advantage of a first- or second-draw PPP, get ready to go. … I don't think you want to be in a situation in which you’re waiting until the last week of the month and run the risk that they might run out.”