Starting Feb. 24, small businesses have exclusive 14-day window to apply for PPP loans

Concerned that small businesses were missing out on the opportunity to get Paycheck Protection Program loans, the Biden Administration is giving them an exclusive two-week period to apply under a yet-to-be-announced process that will make approval easier.

Starting Wednesday, Feb. 24 and continuing through March 9, only businesses with fewer than 20 employees, as well as sole proprietors, independent contractors and the self-employed can apply for PPP loans.

Additionally, the Biden Administration announced it is looking to revise the PPP loan calculation formula, offering more relief and setting aside $1 billion for small businesses located in low- and moderate-income communities. Many of the rules that stopped applicants from applying – such as non-fraud felony convictions – are being lifted as well.

PPP’s economic and tax relief provisions are complex and can apply to specific factual situations. If you would like our assistance with evaluating particular tax and/or economic relief measures under Act, the Boyer & Ritter team is ready to help.

How PPP loan qualification will be easier

A significant change is that loans for sole proprietors will now depend on gross income, a figure that excludes many expenses. That will allow unprofitable businesses to qualify and enable many applicants to collect much larger loans. Even if a business had a loss or no net income in 2019 or 2020, it should now be eligible for a PPP loan.

The Small Business Administration, which oversees PPP, is expected next week to release new guidelines detailing all the changes for small businesses and a new application Form 2483.

Additionally, the Biden Administration is relaxing many of the restrictions that kept some small business owners from qualifying for PPP loans, including:

• Owners with a prior non-fraud felony conviction are no longer barred from applying. Also, the SBA will not disqualify based on any non-fraud felony within the previous year. Incarcerated individuals are still not eligible to apply.
• Applicants who are delinquent on their federal student loans are no longer barred from applying.
• Non-citizen small business owners who are lawful U.S. residents and have Individual Taxpayer Identification Numbers (ITINs) to pay taxes are eligible to apply for a PPP loan. This means people with Green Cards or visas and an ITIN can apply.

Using PPP loans and having them forgiven

Again, while the just-announced program focusing on small businesses may change some of the details, in general, businesses that spend at least 60 percent of their loan on payroll costs and use the remainder on other forgivable costs, can expect to have either some or all of the loan forgiven.

PPP Loan Funding Status

Less than half of the set budget for this round of funding has been disbursed to date and there is currently no expectation that the funds will be depleted prior to the May 31 application deadline (Update March 30, 2021: President Biden signs law extending PPP for small businesses until May 31.)  Businesses interested in receiving a first or second draw PPP loan that are not eligible to apply during the 14-day window should continue to work with lenders and be prepared to apply when funding resumes.

Bottom line

As many of the factors influencing whether you qualify or should apply for the new round of PPP funding are business-specific and may have legal implications, we encourage you to consult with your advisor if you have questions regarding your organization’s eligibility.

We recognize that these are challenging times, and the Boyer & Ritter team can provide coronavirus-related advisory support. To learn more about engaging us for business relief assistance, including PPP Loan Forgiveness Support Services, please contact us HERE.