The Biden administration this morning announced that starting Wednesday there will be a 14-day period during which only small businesses with fewer than 20 employees can apply for relief through the Paycheck Protection Program (PPP).
“These businesses often struggle more than larger businesses to collect the necessary paperwork and secure relief from a lender. The 14-day exclusive application period will allow lenders to focus on serving these smallest businesses,” the administration said.
Statistics show that small businesses account for 44% of the U.S. gross domestic product, create two-thirds of net new jobs and employ nearly half of the country”™s workers, according to the administration.
The administration said that even though the latest round of PPP funding only opened about one month ago already the share of funding going to small businesses with fewer than 10 employees is up nearly 60%. The share of funding going to small businesses in rural areas is up nearly 30%. The share of funding distributed through Community Development Financial Institutions and Minority Depository Institutions is up more than 40%.
The administration said it will be helping sole proprietors, independent contractors and self-employed individuals receive more financial support. It said it is revising the loan calculation formula for these applicants so that it offers more relief. It also said it will establish a $1 billion set-aside for businesses in those categories without employees located in low- and moderate-income areas.
It also said it will be eliminating a restriction that prevents small-business owners with prior nonfraud felony convictions from obtaining PPP relief and another restriction that prevents small business owners who are delinquent on their federal student loans from obtaining PPP relief.
Government statistics show that there were 1,804,910 PPP loans approved during 2021 as of Feb. 18. The loans have a total value of $133.5 billion. The average loan size is $73,966.
For 2020, there were 5.3 million PPP loans approved totaling $521.2 billion. Of that amount, $151.7 billion worth of loans were forgiven. The government declined to forgive $450 million worth of the loans and either was still reviewing or had not received forgiveness applications for the rest of the funds.
