Information for small business owners to consider.
On Monday, Feb. 22, the White House announced several changes to the Paycheck Protection Program (PPP) that went into effect on Wednesday, Feb. 24. These changes are intended to further target “the smallest businesses and those that have been left behind in previous relief efforts.”1
Change #1: Two-Week Exclusive Application Period
Beginning Feb. 24, the PPP will only accept applications from businesses with 20 or fewer employees. According to the White House, approximately 98 percent of small businesses in America have fewer than 20 employees, yet these small businesses have found it difficult to compete with larger companies for PPP loan access. There will be a 14-day exclusive application period, which is designed to help lenders focus solely on serving these small businesses.1
Change #2: Adjustments to the Loan Calculation Formula
The White House has announced that adjustments will be made to the current loan calculation formula. This will be done to address challenges faced by small businesses without employees. These include sole proprietors, independent contractors, and self-employed individuals. In past instances, these business owners have received as little as $1 in PPP assistance or been excluded from receiving funding altogether. In conjunction with an adjustment to the loan calculation formula, $1 billion will be set aside for businesses without employees located in low- and moderate-income areas.1
Change #3: Reduce Non-Fraud Felony Restrictions
The PPP Second Chance Act will eliminate some restrictions business owners currently face. Businesses will no longer be ineligible if a 20 percent or greater owner was convicted of a non-financial assistance related felony in the last 12 months unless they are incarcerated at the time the PPP loan application is filed. In addition, the SBA will remove the restriction on business owners with delinquent student loan debt. The removal of these restrictions will broaden eligibility for business owners who previously were unable to utilize PPP loan assistance.1
Small business owners in many sectors of the economy have been impacted by the ongoing pandemic. While vaccination rollouts are helping to slow the spread of COVID-19, businesses across the country are continuing to grapple with capacity limitations, shutdown orders, and other economic hurdles.
If you’re a small business owner, now may be an opportune time to apply for a PPP loan. Find more information at SBA.gov.
Investment advisory services are offered through BCJ Capital Management, LLC., an SEC Registered Investment Adviser. Information presented is for educational purposes only. It should not be considered specific investment advice, does not take into consideration your specific situation, and does not intend to make an offer or solicitation for the sale or purchase of any securities or investment strategies. Investments involve risk and are not guaranteed. Be sure to consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein.
1-Whitehouse.gov, February 22, 2021
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