Biden-Harris Administration PPP Reform
By Jared Price (MSB’23)
The Biden-Harris Administration is implementing several reforms to Small Business Administration (SBA) programs, specifically the Paycheck Protection Program (PPP), in the wake of the pandemic. The changes expand much-needed support to struggling small businesses and further promote equitable access to relief. In the following blog post, we’ll break down these important updates and what they mean for small business owners in the DMV area.
Important Changes to PPP
Previous relief efforts left behind hard-hit small businesses who needed it most. The latest round of PPP funding under the Biden-Harris Administration prioritized equitable relief efforts for these marginalized businesses. The following reforms support your small business’s efforts to survive, reopen, and rebuild during this time of difficulty:
Provide additional financial support to sole proprietors, independent contractors, and self-employed individuals. A significant majority of all businesses fall into this category. These types of businesses include small independent retailers, home repair contractors, and beauticians. Many businesses in this category operate without employees and are located in low- and moderate-income (LMI) areas. The current PPP calculation formula structurally excludes millions of these applicants or approves them for as little as $1. The Biden-Harris Administration is revising the loan calculation formula and setting aside $1 billion for businesses in this category.
Consistent with the bipartisan bill, eliminate exclusionary restriction that denies small business owners with prior non-fraud felony convictions access to relief through the Paycheck Protection Program. Businesses with 20% ownership held by an individual who has either 1) an arrest or conviction for a felony related to financial assistance fraud within the previous five years or 2) any other felony within the previous year are ineligible for PPP. The Biden-Harris administration is pressing for bipartisan reforms included in the PPP Second Chance Act, which would eliminate the second restriction (the one-year look-back).
Eliminate an exclusionary restriction that denies small business owners who are delinquent on their federal student loans access to relief through the Payroll Protection Program. Businesses with 20% held by an individual who is currently delinquent or has defaulted on a federal debt, including a student loan, within the last seven years, are ineligible for PPP. The SBA is working with the Departments of the Treasury and Education to remove the student loan delinquency restriction.
Ensure access for non-citizen small business owners who are lawful U.S. residents by clarifying that they may use Individual Taxpayer Identification Numbers (ITINs) to apply for relief. Under the PPP statute, all lawful U.S. residents are eligible to access the program. But, a lack of guidance from the SBA in prior rounds of funding created inconsistencies in access for ITIN holders, including Green Card holders or those living in the U.S. on a visa. The SBA issued clear guidance in the past weeks to broaden access to PPP to all lawful U.S. residents.
Additional Relief Efforts
Along with these specific reforms, the Biden-Harris Administration is taking additional steps to ensure equitable distribution of relief. These efforts include:
Addressing waste, fraud, and abuse across all federal programs to create streamlined approval processes.
Promoting transparency and accountability by improving the PPP loan application.
Improving the Emergency Relief Digital Front Door by updating key areas of SBA websites and providing easy access to relief resources.
Conducting extensive stakeholder outreach to gauge challenges and opportunities in the deliverance of current emergency relief programs.
Improving the current lender engagement model to further provide personalized support and access to capital for small businesses.
For additional information about current relief programs and HMFI’s role in supporting your small business, please visit our COVID resource center here.
Published on March 21, 2021