The Paycheck Protection Program (PPP) was created in 2020 to provide financial assistance to businesses affected by the pandemic. The loans do not have to be paid back if a business complies with the program’s rules.
This week, the White House announced several changes to the PPP loan program intended to help small businesses qualify for these loans:
PPP applications limited to small businesses and sole proprietors for the next two weeks: Starting Wednesday, February 24th, PPP applications will only be accepted from small businesses with 20 or fewer employees for the next two weeks. This change is intended to allow lenders to focus on smaller businesses needing a loan.
Small businesses applying for a PPP loan in the next two weeks must apply with their bank and, if you are applying for your second PPP loan, you still have to show a 25% reduction in your gross receipts from 2019 to 2020.
New loan formula for sole proprietors/self-employed/independent contractors: Loan amounts for these businesses had been based on their annual profit, but the new formula will focus on gross income before expenses are deducted to help increase the amount of the loan these businesses are eligible to receive.
Expanded eligibility to apply for a loan: Non-citizen business owners who are lawful U.S. residents may now apply for a PPP loan using their Individual Tax Identification Number (ITIN). Also, business owners with felony convictions and delinquent federal student loans may apply.
Businesses with more than 20 employees will be able to resume applying for a PPP loan after March 10th until the PPP loan program ends on March 31st.
For more information on these changes, click here.