WASHINGTON – A federal program that provides loans to businesses to help them stay afloat during the coronavirus pandemic is undergoing changes to allow more money to be directed to the small businesses that need it most.
President Joe Biden will announce on Monday several revisions to the Paycheck Protection Program, which Congress approved last year as part of a nearly $ 2 trillion COVID relief bill.
While the program has brought urgent aid to many businesses across the country, the first round of loans granted under the program last year left too many minority and mother-owned businesses behind and children, while larger, better-connected companies got the funds quickly from administration officials said Sunday.
To address those concerns, Biden will announce that only companies with fewer than 20 employees will be allowed to apply to the program over a 14-day period starting Wednesday. Some 98% of small businesses have fewer than 20 employees and the 14-day application period will allow lenders to focus on their service, administration officials said.
Report: Thousands of PPP loans have gone to small businesses that shouldn’t have received them
The administration will also revise the program’s loan calculation formula so that independent contractors, self-employed workers and sole proprietors have a better chance of securing the loans. Under the current formula, many of these businesses, which include home repair contractors, beauticians and small independent retailers, have been excluded from the program or approved for as little as $ 1.
In addition, Biden plans to remove provisions that prevent small business owners from participating in the program if they have previously been convicted of a felony, or are currently in arrears or have defaulted on their federal student loans in the past seven years. .
Another change will allow small business owners who are not U.S. citizens but are legal residents of the country to access loans using their individual tax identification number to apply for the program.
More than 5 million businesses obtained loans totaling $ 525 billion under the Paycheck Protection Program last year. Congress allocated $ 284 billion for another round of loans in December. So far, only $ 134 billion has been awarded to 1.8 million small businesses in the last cycle.
Loans can be canceled if a business spends at least 60% of the money on salary expenses, such as salaries, wages, group health insurance, and a maximum of 40% on other eligible expenses.
The program expires at the end of March.
Michael Collins covers the White House. Follow him on Twitter @mcollinsNEWS.
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