top of page

Biden Administration Proposed Changes to the PPP Loan Program


(PLEASE NOTE: PPP Loan info changes regularly. For the most up to date info, please visit the SBA website.)


The Biden administration has announced changes to the existing Paycheck Protection Program (PPP). The changes are aimed to make the loan program more equitable and reachable for small businesses. It aims to provide relief to businesses with less than 20 employees and sole proprietors.


The Payment Protection Program

Ex-president Donald Trump signed the bill of Economic Aid last December. The Bill provided an additional $284 billion to the PPP loan program. The Biden administration has proposed some key changes to make the loan program more equitable. It will be the third round of funding under the PPP loan program.

For the third round of funding under the PPP loan program, there are two options for you to find a matching loan type:

  1. First Draw PPP Loans: These loans are for you if you have never received the PPP loan earlier. Many small businesses would fall under this category.

  2. Second Draw PPP Loans: These loans are for businesses who received a loan earlier as well. You’ll need to meet certain conditions to get a loan for this round of funding though.

The deadline for the third funding round under the PPP loan is May 31, 2021.

The Biden Administration proposed some changes to give more access to loans for the small businesses specifically. The SBA announced a specific 14-day window of receiving loan applications only from small businesses with less than 20 employees. The 14-day application receiving window started on February 24.

All businesses can still apply for the PPP loans until the deadline of May 31, 2021.


Recent Changes to the Payment Protection Program

Although experts have predicted a slowing demand for loans as businesses reopen, still small businesses would find it hard to return to a pre-covid19 normal. The recent changes made by the Biden administration would provide significant relief to small businesses, self-employed, sole proprietors, house workers, and other small working groups.

Here are a few salient features of the proposed changes to the PPP Loan program.

  • The changes allowed a special 14-day window for only small businesses applying for PPP loan grants.

  • The changes encourage small businesses, self-employed, digital services providers, and sole proprietors to apply for loans.

  • The third round of PPP loan funding is for the first-time borrowers and businesses who earlier received a loan but witnessed a decrease of 25% sales during the pandemic year of 2020 as compared to 2019.

  • The changes allow more relief options for businesses with less than 20 employees as a specific amount of $1 billion is set aside.

  • The changes eliminate restrictions for business owners with convictions of a non-fraud felony.

  • Allows business owners to apply for the PPP loans with delinquent student loans.

  • The changes allow more access to lawful US-Residents who are not US citizens. These US Residents can use a valid Tax identification number to apply for the PPP loans.

Relief for Small Businesses and Sole Proprietors

The Biden administration has addressed a critical issue of small businesses that had not received relief through a loan forgiveness program earlier. One such move was to allocate $15 billion specifically for these small and low-and medium-income businesses only. The amount will be disbursed to applicants applying through a special 14-day priority window.

Previously business owners delinquent on student loans couldn’t obtain any assistance. Owners with a non-fraud felony conviction were also excluded from the relief option. The changes are also encouraging for business owners of color and US residents without US Citizenships.

Overall, the PPP loan program has seen a few drastic changes to allow small business owners more relief options. The SBA has made some changes to the loan application, processing, and approval procedures that will help small businesses without professional resources.


The Challenges with Proposed Changes

The proposed changes to the PPP loan program are encouraging for small businesses overall. However, there are critical challenges for lenders, small business owners, and the SBA as well. The most significant being the time constraint. The lenders are finding it hard to adapt to the changes quickly. The borrowers would still have to wait and find a suitable lender, the persisting problem as earlier. The SBA has been addressing the issue by providing more resources and guidelines to lenders and borrowers alike.

13 views0 comments
bottom of page