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On Feb. 22, Changes to The Paycheck Protection Were Announced. Here’s a Quick Summary For Small Business Owners Thumbnail

On Feb. 22, Changes to The Paycheck Protection Were Announced. Here’s a Quick Summary For Small Business Owners

About the author: Lamar Watson, CFP®, is a Fee-Only Financial Advisor in the Washington, D.C. area that works with clients virtually across the country. Lamar's work with his clients focuses on budgeting, employee benefits, paying down debt, buying their first home, and investing. Lamar is the Founder of Dream Financial Planning, a virtual Fiduciary Financial Planning firm specifically designed to help young professionals and minorities take control of their finances and fulfill their dreams. Feel free to schedule a complimentary consultation to learn how we use the DREAM Financial Planning Process ™ to help our clients achieve their goals. 

On Monday, Feb. 22, the Biden Administration announced several changes to the popular Paycheck Protection Program (PPP) - some of which went into effect as of Feb. 24. According to a White House press release, these changes are intended to further target “the smallest businesses and those that have been left behind in previous relief efforts.”1

If you’re a small business owner in need of financial assistance, you may find these changes helpful in securing a PPP loan.

What’s Changing?

While Biden has indicated that the trillion-dollar American Rescue Plan is still on its way, these new changes are meant to make help more accessible to those who’ve had trouble obtaining financial assistance in the past.

Change #1: Two-Week Exclusive Application Period 

Beginning Feb. 24, the PPP will only accept applications from businesses with 20 or fewer employees. According to the White House, approximately 98 percent of small businesses in America have fewer than 20 employees, yet these small businesses have found it difficult to compete with larger companies for PPP loan access.1

There will be a 14-day exclusive application period, which is designed to help lenders focus solely on serving these small businesses.

Change #2: Adjustments to the Loan Calculation Formula 

The Biden administration has announced that adjustments will be made to the current loan calculation formula. This will be done in an effort to address challenges faced by small businesses without employees. These include sole proprietors, independent contractors, and self-employed individuals.

In past instances, these business owners have received as little as $1 in PPP assistance or been excluded from receiving funding altogether.1 In conjunction with an adjustment to the loan calculation formula, $1 billion will be set aside for businesses without employees that are located in low- and moderate-income areas.1

Change #3: Reduce Non-Fraud Felony Restrictions

A business is considered ineligible for a PPP loan if it is 20 percent or more owned by someone who was either:1

  1. Arrested or convicted on felony charges for financial assistance fraud within the last five years or
  2. Arrested or convicted for any other felony within the last 12 months or
  3. Currently delinquent or defaulted within the last seven years on federal student loans.

With bipartisan support, the administration is rolling out the PPP Second Chance Act, which will eliminate the second restriction business owners currently face. Businesses will no longer be ineligible if a 20 percent or greater owner was convicted of a non-financial assistance-related felony in the last 12 months - unless they are incarcerated at the time the PPP loan application is filed.

In addition, the SBA will remove the restriction on business owners with delinquent student loan debt. The removal of these restrictions will broaden eligibility for business owners who previously were unable to utilize PPP loan assistance.

Change #4: Establish Access for Non-Citizen U.S. Residents

When the PPP was established, it was stated that all legal U.S. residents were eligible to access the program (granted they met the other eligibility requirements).

However, there was inconsistency and confusion amongst non-citizen residents, including ITIN holders who held Green Cards or lived and worked in America on a visa. According to the White House, the SBA is expected to release clear and consistent information regarding the application process for ITIN holders who are eligible for PPP loans and may have been previously denied access.

Small business owners have been impacted greatly by the ongoing pandemic. While vaccination rollouts are helping to slow the spread of COVID-19, businesses across the country are continuing to grapple with capacity limitations, shutdown orders, and other economic hurdles. If you’re a small business owner struggling to make ends meet, now may be an opportune time to apply for a PPP loan. If you have any questions regarding this process or your eligibility, your financial advisor may be able to help.

Dream Financial Planning Process ™

Whether you're managing student loan debt, starting a family, or considering buying your first home, the DREAM Financial Planning Process™ is tailored to the unique needs of busy professionals in their 30s and 40s. This process focuses more on short-term goals while you grow and evolve in your personal and professional life. If you're looking for guidance on Financial Planning, optimizing employee benefits, budgeting, student loans, and managing your 401k or investments, we can help.

Complimentary Consultation

With uncertainty surrounding the economic stability of our country, it's okay to have fears and anxieties surrounding your own savings and investments. The most productive course of action from here is to reach out to Dream Financial Planning (or whoever your trusted advisor might be) and discuss your options. It's easy to have knee-jerk reactions when it feels like the bottom is falling out, but it is imperative to make decisions using research-backed data and a level head. If you'd like a Complimentary Review and risk assessment of your investment portfolio, feel free to send me an e-mail.

Monthly Newsletter

If you're looking to buy your first home, you'll want to read this month's Newsletter. In my February Newsletter, I discuss how student loans could affect your ability to buy a home with Megan Leonhardt of CNBC. There are also blog posts that discuss 7 Tax Deductions For The Self Employed and 4 Common Mistakes Made by First Time Homebuyers.


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  1. https://www.whitehouse.gov/briefing-room/statements-releases/2021/02/22/fact-sheet-biden-harris-administration-increases-lending-to-small-businesses-in-need-announces-changes-to-ppp-to-further-promote-equitable-access-to-relief/

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