Self-Employed? New PPP Updates Will Help More Independent Contractors with Forgivable Loans

by Edgar R. Olivo

The Biden-Harris administration announced this week that the Paycheck Protection Program will now target businesses with fewer than 20 employees. The 14-day application window is set to begin on Wednesday, February 24, 2021, with revised policies to the program that will make access to relief funds more equitable to entrepreneurial communities of color. This was the largest group to experience limited access to the PPP relief, crushing millions of small-business owners in the wake of COVID-19.

This great news comes after the latest round of PPP a month ago. The program has improved since its first rollout. The White House released a fact sheet in which it disclosed that access to the small-business relief funds has improved by 60% to small businesses with fewer than 10 employees, up 30% for those in rural areas, and more than 40% distributed by community development financial institutions and minority depository institutions.

Here are few updates for small-business owners who have yet to access PPP relief funds.

  1. The program will help sole proprietors, independent contractors and self-employed individuals receive more financial support. This group of small businesses includes home repair contractors, beauticians and small independent retailers. More than 70% of these small businesses are owned by women and people of color. A new loan calculation will be released to help applicants access more relief funds.
  2. The program will remove restrictions that prevent small-business owners with prior non-fraud felony convictions. Currently, any owner with 20% or more ownership with (1) an arrest or conviction for a felony related to financial assistance fraud within the previous five years; or (2) any other felony within a previous year is ineligible. To expand access to the program, the Biden-Harris administration is proposing a bipartisan reform called the PPP Second Chance Act to remove the second restriction (the one-year look-back) unless the applicant or owner is incarcerated at the time of the application.
  3. The program will remove exclusionary restrictions to small-business owners who are delinquent on federal student loans. Currently, the program is not available to a small-business owner with 20% or more ownership and who is currently delinquent or has defaulted within the last seven years on a federal debt, including a student loan. According to the White House fact sheet, millions of Americans are delinquent on student loans, including a disproportionate number of Black borrowers. Working with the departments of the Treasury and Education, the SBA will remove the student loan delinquency restriction to broaden access to the PPP.
  4. The program will ensure access to non-citizen small-business owners who are lawful U.S. residents by clarifying that they may use ITIN to apply for relief. The PPP statute is clear that all lawful U.S. residents may access the program, but a lack of guidance from the SBA has created inconsistency in access for ITIN holders like Green Card holders or those here on a visa. The SBA will address this unfair inconsistency by issuing clear guidance in the coming days that otherwise eligible applicants cannot be denied access to the PPP because they use ITINs to pay their taxes.

The Biden-Harris administration is also taking extra measures to ensure equitable distribution on PPP relief funds such as addressing waste, fraud and abuse across all federal programs.

The administration currently promotes transparency and accountability by improving the PPP loan application and improving website experiences on all SBA websites. Access to capital is a priority for this administration and it plans to enhance the current lender model. This model will increase opportunity for lenders to provide recommendations about the PPP and open channels of communication to improve the program over time.

Small businesses that qualify during this window are encouraged to apply. Many organizations stand by to help you with PPP loans. Visit the official SBA approved lender list to find one near you.

EDGAR RAFAEL OLIVO is a bilingual business educator, economic advisor and contributor for several media outlets. He’s a nonprofit executive who is passionate about education. He is certified in finance and data analytics and holds a business degree from Arizona State University.

Para la versión en español de este artículo, haga clic aquí.

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