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The Biden administration announced the change to the Paycheck Protection Program on Monday, along with other measures to improve access to funding for minority-owned businesses.
Small businesses with fewer than 20 employees will have a two-week exclusive window to apply for Paycheck Protection Program funds, the Biden administration announced Monday.
The application period, which begins Wednesday, and other eligibility changes are meant to help the smallest businesses and minority-owned firms gain access to the forgivable loan program, White House officials said.
Not all businesses had equal access to the initial rounds of funding made available through the program, and some big national restaurant and hotel chains received large sums while small businesses struggled to obtain the necessary paperwork for applications or to be approved by lenders.
“When the Paycheck Protection Program was passed, a lot of these mom-and-pop businesses got muscled out of the way by bigger companies that jumped to the front of the line,” President Biden said.
Since the start of the coronavirus pandemic, Biden said upwards of 400,000 businesses have closed their doors.
“Walk down any main street and you see it—empty storefronts, goodbye signs hanging in the windows,” he said.
While calling on Congress to pass his $1.9 trillion coronavirus relief proposal, Biden highlighted the revisions to the Paycheck Protection Program as a way to help small businesses ride out the economic hardship the pandemic has caused.
The Paycheck Protection Program was developed as a way to keep small businesses afloat during the pandemic by offering them forgivable loans under the agreement they do not lay off workers. The program has made more than $662 billion in loans available to businesses, money that can be used to fund payroll, or pay mortgage interest, rent utilities or other costs related to the pandemic.
The Biden administration will change certain eligibility requirements for the program in an effort to make it more accessible to minority-owned businesses. Currently, businesses are not eligible for PPP funds if an owner has had a felony arrest or conviction in the last year. The Biden administration changes would eliminate that restriction so long as the convictions are not fraud related.
Another current restriction prevents small business owners who are behind on student loan payments from obtaining PPP loans. The Biden administration would remove that restriction from the program as well.
“The changes announced today will roll back restrictions that disproportionately impact entrepreneurs of color from receiving relief,” said White House Press Secretary Jen Psaki.
The administration will also offer more relief to sole proprietors and independent contractors, with $1 billion set aside for those located in low-and moderate-income areas.
The Small Business Majority, an advocacy organization representing small businesses, praised the decision and noted that the changes would ensure some of the most vulnerable small businesses are eligible for the program.
“While small businesses will need much more than PPP to ensure their long-term recovery, including direct grant assistance, we’re glad the administration is taking this important step to make the program more equitable,” said the organization’s CEO John Arensmeyer.
In a survey of 500 businesses conducted this year, the Small Business Majority found that 4 in 10 small business owners said they would need no-cost grants or zero interest loans in order to stay open. Only about 30% of respondents had applied for a PPP loan, and of those that received funding through the program, only about a third of the businesses received the full amount they requested.
Andrea Noble is a staff correspondent with Route Fifty.