With the aim of securing more federal aid for small and most vulnerable businesses, the Biden administration is changing the rules of the Paycheck Protection Program, increasing the number of sole-owner companies with more than 20 employees receiving 14-day freezes for loans Doing and applying are eligible. .
The freeze will take effect on Wednesday, with the Small Business Administration planning to announce it on Monday. In the December economic relief package, Congress allocated $ 284 billion to restart the aid program. Banks and other financiers, which make government-backed loans, have disbursed 134 billion to 1.8 million businesses since lending last month. If the recipient follows the rules of the program, the money is intended to be forgiven.
Companies with more than 500 workers are generally eligible for loans, although second-attract loans – whose sales are up 25 percent or more, have been in at least one quarter since the coronovirus epidemic began – 300 or more. Are limited to companies with fewer employees. The 14-day moratorium aims to focus the attention of lenders on the best businesses, according to administration officials, who spoke to reporters at a news briefing on Sunday that they were not named.
Most small businesses are single enterprises, employing only the owner. For companies that include sole proprietorships and independent contractors, a major barrier to obtaining relief amounts was a program rule based on the annual profit reported on their taxes and the size of their debt. This disqualified unprofitable businesses for assistance, and left thousands of applicants with small loans – some as small as $ 1.
The new formula, which Small Business Administration officials said will be released soon, will focus on gross income. That calculation, which is done before many spending cuts, will allow unprofitable businesses to qualify for loans.
The agency is also changing several other program rules to expand eligibility. People with recent felony tied to fraud will no longer be able to enforce, who are delinquent or default on federal student loan debt. The agency also updated its guidance to clarify that business owners who are not citizens of the United States, but are eligible for a valid resident loan.