Paycheck Protection Program to offer exclusive Covid-19 loan application window to smaller businesses


WASHINGTON — President Biden on Monday announced changes to the federal government’s flagship coronavirus program for small businesses, with the goal of improving access for very small businesses and those owned by minorities or located in low-income communities. underserved communities.

As part of the changes, the Small Business Administration will accept Paycheck Protection Program applications exclusively from businesses with fewer than 20 employees for 14 days starting Wednesday, Biden said.

The changes “will make us watch out for family businesses even more than we already do,” Biden said.

The PPP, which offers repayable loans to small businesses to help them cope with the economic impacts of the coronavirus pandemic, reopened in January after being closed since August. The loans are issued by lenders and backed by the SBA.

PPP candidates with fewer than 20 employees will be able to apply exclusively from 9 a.m. ET on Wednesday until 5 p.m. ET on March 9, an administration official said.

The program as a whole is scheduled to end on March 31.

The exclusive window “will give lenders and community partners more time to work with these Main Street businesses that anchor our neighborhoods and help families build wealth, while ensuring that large PPP-eligible businesses will still have plenty time for three weeks to apply and receive support before the program expires,” the official said.

Last year, the PPP came under public scrutiny as very small businesses and those without existing banking relationships initially struggled to access the program. Advocacy groups and others have also expressed concerns about how the program is reaching minority and underserved communities.

Paycheck Protection Program issues

The SBA under the Biden administration and the Trump administration has stressed that community lenders are key to ensuring the program reaches a range of businesses, including those that do not have strong ties to traditional banks. Under the reopened program, community and small lenders issued PPP loans exclusively during the first few days, a step the SBA said it implemented to boost the participation of minorities, women, veterans and underserved communities.

Mr. Biden announced other changes aimed at improving access for sole proprietors, independent contractors and the self-employed, including how they calculate their loan amounts.

Administration officials said they heard from applicants who were approved for loans of just $1 because the rules required them to calculate the loan amount using the net income reported on their tax returns. These applicants will now be able to calculate their loan amount using gross income.

The SBA will also set aside $1 billion in program funding for applicants without employees who are also located in low- or moderate-income communities, the official said.

Other planned changes include allowing broader access to the program for applicants with felony convictions without fraud, in line with a bipartisan proposal by Sens. James Lankford (R., Okla.), Rob Portman (R., Ohio), Ben Cardin (D., Md.) and Cory Booker (D., NJ). The administration official said the SBA will also work with the Treasury and Education Departments so that borrowers who have recently defaulted or are behind on federal student loan payments are not barred from receiving PPP loans.

Congress provided $284 billion for the latest round of PPPs, as part of its coronavirus relief package passed in December. As of Feb. 21, less than half of those funds were depleted, according to agency data, as the SBA had approved about $140.3 billion in loans since the program reopened Jan. 11.

Black small business owners have faced barriers accessing the Paycheck Protection Program. Here’s how the African American owners of MahoganyBooks in Washington, DC, kept their small business afloat. Photo: Zach Wood for The Wall Street Journal (originally published June 12, 2020)

Agency data as of Feb. 18 shows about 25% of the reopened program’s loan volume was approved for applicants in low- and moderate-income communities. About 94% of loans approved were for amounts under $250,000, which the SBA says is a sign that the program is reaching small borrowers.

Meanwhile, new measures to guard against fraud delayed the processing of loan applications in the last PPP round, lenders said. The holdups are the result of flags the SBA placed on the files of about 240,000 original PPP recipients for issues ranging from clerical errors to indications of possible wrongdoing.

The Consumer Bankers Association applauded the changes announced Monday but called on the SBA to resolve the delays.

Without addressing the issues, “this two-week window will not fundamentally change the hurdles businesses face,” Richard Hunt, the group’s chief executive, said in a statement. “It’s like giving everyone a train ticket on an unfinished railroad.”

The SBA said it is working with lenders to resolve the blocks, including giving them increased authority to certify applicants as eligible for the program.

Write to Amara Omeokwe at

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