22 February 2021

Biden-Harris Administration Announces Imminent Two Week Pause on Larger Paycheck Protection Program (PPP) Loans, Additional Program Reforms

On Monday, February 22, 2021, the White House announced several imminent changes to the Paycheck Protection Program (PPP) administered by the U.S. Small Business Administration (SBA).  Most notably, beginning on Wednesday, February 24, SBA will commence a two week period during which only businesses with fewer than 20 employees may apply for PPP loans.  The Biden-Harris Administration (the Administration) hopes that this two-week exclusive application period will allow PPP lenders to focus on serving these smallest businesses.

Additionally, the Administration announced that it would be working with SBA to enhance the benefit of PPP loans to sole proprietors, independent contractors and self-employed individuals by revising the loan calculation formula for these applicants to offer more relief and establishing a $1 billion set aside for businesses in this category located in low- and moderate-income (LMI) areas.  Presently, approximately $150 billion in Congressionally-approved PPP appropriations remain available for first and second draw PPP loans.

The Administration also announced that it would loosen and/or eliminate certain “exclusionary” restrictions on obtaining PPP loans, including exclusions that currently apply to small business owners with prior non-fraud felony convictions as well as those who are delinquent on their federal student loan payments.

Finally, the Administration will work with SBA to issue clear guidance that non-citizen small business owners who are lawful U.S. residents may use Individual Taxpayer Identification Numbers (ITINs), such as Green Card holders or those present in the United States on a visa, to apply for PPP loans.

Other related measures announced by the Administration include the following initiatives:

  • Continuing to address “waste, fraud, and abuse” across all federal programs.
  • Promoting transparency and accountability by improving the PPP loan application and enhancing the collection of borrowers’ demographic information.
  • Working to update key areas of SBA websites to help more applicants find resources for understanding relief options and completing applications.
  • Continuing to conduct extensive stakeholder outreach to learn more about challenges and opportunities in the implementation of current emergency relief programs.
  • Launching a new initiative to deepen SBA’s relationships with lenders, with the objective of increasing opportunities for lenders to provide recommendations and ask questions about the PPP and drive more streamlined resolution of open questions and concerns.

Miller Johnson’s team of multi-disciplinary attorneys will continue to monitor developments related to the PPP and other government relief programs.  Our team has worked with many PPP borrowers to analyze complex eligibility and forgiveness issues and to facilitate the ability to respond quickly and accurately to any potential audit or review of a PPP loan.  Please reach out to us if you have questions or would like assistance in complying with the PPP, including the extensive documentation requirements and preparing for the loan forgiveness process.  Thank you.