A Vital PPP Loan Update for Solopreneurs and the Smallest Businesses
When the Paycheck Protection Program first launched in March 2020, what was supposed to be a life raft for small business owners during the pandemic was anything but. A significant portion of loans went to large companies that had a better chance of surviving than most and/or weren’t “small businesses” to begin with. Some entrepreneurs were subject to a waiting period once applications opened. And for many, the loans simply came with way too many strings attached, making it hard to actually benefit from the money boost. These setbacks are just the tip of the iceberg.
Fast-forward one year later and one, we’re still navigating a pandemic, and two, the Paycheck Protection Program is still up and running. But this time around, it appears to have undergone some changes to make access more equitable (just in time for Women’s History Month).
On February 22, President Biden announced that from February 24-March 9, 2021, the PPP loan application would be exclusive to sole proprietors and businesses with fewer than 20 employees. After that period ends, all small businesses will have a chance to apply before the program expires on March 31, 2021. Other major changes listed on the Small Business Administration website are:
- Allow sole proprietors, independent contractors, and self-employed individuals to receive more financial support by revising the PPP’s funding formula for these categories of applicants;
- Eliminate an exclusionary restriction on PPP access for small business owners with prior non-fraud felony convictions, consistent with a bipartisan congressional proposal;
- Eliminate PPP access restrictions on small business owners who have struggled to make student loan payments by eliminating student loan debt delinquency as a disqualifier to participating in the PPP; and
- Ensure access for non-citizen small business owners who are lawful U.S. residents by clarifying that they may use Individual Taxpayer Identification Number (ITIN) to apply for the PPP.
The SBA is currently offering three types of relief which you can apply for as a “First Draw PPP Loan” (if you’ve never applied before) or “Second Draw PPP Loan” (If you’re back for more). While it will take time to see if this second try fares better than the first, we’re happy to see the smallest businesses and solopreneurs amplified in the funding process.
Visit the SBA website for more information.
Subscribe to the BlogHer newsletter for more tactical advice, exclusive content, and timely event updates.