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Details Begin to Emerge on New PPP Changes

The Biden Administration announced changes to the PPP Monday morning with the goal of promoting equitable access to the program for small business relief. These changes were outlined in a White House Fact Sheet which can be found here. SBA held a 30-minute webinar yesterday afternoon to provide a little more clarity on the Administration’s announcement while also stating that more details will be released throughout the week. Below are the highlights of information shared by SBA during their webinar. 

  • Beginning Wednesday, Feb. 24 through March 9, SBA will only accept applications from borrowers with fewer than 20 employees. To determine whether you qualify, a borrower must count all employees regardless of whether they are full-time, part-time, or seasonal. Unlike other aspects of PPP, this threshold is a headcount threshold, not an FTE number. 
    • All applications pending beginning Wednesday due to hold codes or other reasons will continue to move through the resolution process during this 14-day window and may be approved during this time, assuming all criteria are met, despite the application coming from a business with 20 or more employees. 
    • If an application is submitted during this 14-day period for a borrower that has 20 or more employees, then SBA will reject the application rather than hold it in a queue. The application may be resubmitted beginning March 10. As a result, lenders are encouraged to take applications from such PPP borrowers during this 14-day period; however, they must hold them until March 10 at which time they may be submitted through SBA’s portal. 
  • SBA is working on a formula change for sole proprietors, independent contractors, and self-employed individuals; however, the new rules around this change will likely not be finalized until later this week and therefore not available until next week. It is uncertain at this time whether this change will be prospective only or retroactive. The change will allow a maximum loan amount to be determined from Line 7 of Schedule C rather than Line 31. SBA may also develop a special application form for such borrowers. 
  • SBA is clarifying that small business owners who are lawful U.S. residents and who use an ITIN to file taxes are eligible to apply for a PPP loan using their ITIN assuming all other criteria are met. 

WBA also continues to hear from other sources that it remains unlikely that the PPP will be extended beyond March 31. WBA is also expecting SBA to clarify the circumstances in which a borrower could obtain both a First Draw PPP loan in 2021 and a Second Draw PPP loan in 2021 without waiting for a full 8-week forgiveness covered period to expire. At this time, it is unknown how quickly this information will be released by SBA. WBA will continue to monitor all these developments and share updates with the membership promptly as they occur. 

By, Alex Paniagua