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Yesterday, in a televised address, President Biden announced that the current iteration of the Paycheck Protection Program (PPP) will only be available to businesses with fewer than 20 employees for two weeks starting on Wednesday, Feb. 24. Citing the number of small ‘mom and pop’ shops that have permanently closed their doors during the pandemic, the President stated, “These small businesses, not the ones with 500 employees, but these small businesses that are a handful of folks, they are ninety-percent of the businesses in America.”

Indeed, according to Inc., sole-proprietors and small businesses have experienced difficulty securing loans due to lenders’ aversion to smaller loans that yield less profitable margins. In other cases, the amount some applicants qualified for was as little as one dollar due to their size₁. Other difficulties for small business owners include exclusions based on student loan defaults or past criminal records that have nothing to do with fraud.

According to the White House fact sheet which enumerates the changes to the current PPP, additional measures include:

• Revise the loan calculation formula for sole proprietors, independent contractors and self-employed individuals so that it offers more relief. Additionally, set aside $1 billion for businesses employees located in low- and moderate-income (LMI) areas.
• Remove exclusionary restrictions which prevent small business owners with previous non-fraud felony convictions from qualifying for PPP funds.
• Eliminate the restriction which excludes applicants that are delinquent on their federal student loans from obtaining relief through the PPP.
• Make PPP funds accessible for non-citizen small business owners who are lawful U.S. residents by allowing them to use individual taxpayer identification numbers (ITINs) on their applications.

Another concern the President addressed was equitable distribution of PPP funds. According to the Journal of Accountancy, the U.S. Small Business Administration is to continue its efforts to work with lenders to streamline processes that will resolve processing delay issues and ensure that taxpayer funds are spent wisely₂.

Four additional objectives are listed on the fact sheet itself:

• Revamp the PPP application to encourage self-reporting of demographical information to promote transparency and accountability.
• An update to key areas of SBA websites to make resources that improve understanding of relief options and application processes easier to find.
• Outreach to stakeholders to improve understanding of challenges and opportunities in the implementation of current emergency relief programs. To engage with communities at all levels and across agencies to inform the design and delivery of initiatives that meet their needs.
• Improve the engagement model between the SBA and its lenders with the goal to streamline the resolution of open questions and concerns regarding the PPP.

Undoubtedly, many of these changes will require additional guidance from the SBA and other agencies to ensure that implementation occurs as intended. The MICPA will continue to track these developments as they occur to bring you the latest.

1. Ransom, Diana. “Biden Changes PPP Rules to Help America’s Smallest Businesses.” Inc. 22 Feb. 2021. Accessed 23 Feb. 2021.
2. Drew, Jeff. “New PPP Changes Attempt to Ease the Smallest Businesses’ Access.” Journal of Accountancy. 22 Feb. 2021. Accessed on 23 Feb. 2021.