WASHINGTON – A federal program that provides loans to companies to help them stay afloat throughout the year Coronavirus pandemic Some changes are being made so that more money can be directed to small businesses that need it most.
president Joe Biden will announce several revisions on Monday Paycheck Protection Program, which Congress approved last year under a nearly $ 2 trillion COVID relief bill.
While the program provided urgent relief for many businesses across the country, the first round of loans granted under the program last year missed too many minority and mom-and-pop businesses while larger, better-connected companies left the funds received quickly. Administration officials said Sunday.
To address those concerns, Biden will announce that only companies with fewer than 20 employees will be able to apply for the program over a 14-day period beginning Wednesday. About 98% of small businesses have fewer than 20 employees, and the 14-day application deadline allows lenders to focus on their services, according to administrative officials.
Report: Thousands of PPP loans went to small businesses that should not have been given them
The administration will also revise the program’s loan calculation formula to give independent contractors, self-employed workers and sole proprietors a better chance of receiving the loans. Under the current formula, many of these companies, which include repair companies, estheticians, and small independent retailers, have been banned from the program or approved for just $ 1.
In addition, Biden plans to remove provisions that exclude small business owners from participating in the program if they have previously been convicted of a crime or are currently in default in the past seven years, or if their federal student loans have defaulted.
Another change will make it easier for small business owners who are not US citizens but are legal residents of the country to access the loans by using their unique tax identification numbers to apply for the program.
More than 5 million companies received $ 525 billion in loans through the Paycheck Protection Program last year. Congress provided $ 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 round.
The loans can be granted if a company spends at least 60% of the money on labor costs such as wages, salaries, group health insurance and a maximum of 40% on other qualified expenses.
The program expires at the end of March.
Michael Collins reports on the White House. Follow him on Twitter @mcollinsNEWS.
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