The Biden administration announced a two-week period in which only businesses with fewer than 20 employees can apply for loans through the Small Business Administration Paycheck Protection Program, starting Feb. 24.

This 14-day window is part of a series of changes to the program announced by the administration. The way loans are calculated will also be revised so that businesses without employees receive additional relief.

“These types of businesses, which include home repair contractors, beauticians, and small independent retailers, make up a significant majority of all businesses. Of these businesses, those without employees are 70 percent owned by women and people of color,” according to the White House press release. “Yet many are structurally excluded from the PPP or were approved for as little as $1 because of how PPP loans are calculated.”

The previous calculation, which was based on payroll, rendered the program less effective for sole proprietors, independent contractors and the self-employed. A $1 billion portion of PPP loan funds will also be set aside for these businesses in low-and moderate income areas.

While reported data illustrates we have made real strides in ensuring these funds are reaching underserved communities, we believe we can still do better,” said Michael Roth, a senior advisor for the SBA. “The important policy changes we are announcing further ensure inclusivity and integrity by increasing access and much-needed aid to Main Street businesses that anchor our neighborhoods and help families build wealth.”  

Additionally, two application exclusions will be eliminated: One barring business owners who have non-fraud felony convictions and one barring those who are delinquent on federal student loans. The new changes will also allow non-citizens who are lawful U.S. residents to apply for loans using individual taxpayer identification numbers.

The changes to the program build on the third round’s success since its launch a month prior. Compared to the previous round, the share of PPP funding going to small businesses with fewer than ten employees is up by almost 60 percent; the share of funding going to rural small businesses is up by almost 30 percent, and the percentage of funding distributed through Community Development Financial Institutions and Minority Deposit Institutions is up by more than 40 percent, according to press releases by the White House and the SBA.

To prompt more applicants to self-report demographic data, the SBA also updated the loan application form to include demographic information on the front page. The SBA is also launching a new initiative to enhance the current lender engagement model, which is intended to increase lender feedback and streamline resolutions.


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