Smallest Businesses Prioritized in Paycheck Protection Program Changes

By: Editorial Staff Posted: 02/22/2021

Learn more about the upcoming dedicated lending period for employers with fewer than 20 employees, and important changes

Small businesses make up 80 percent of the Seattle Metropolitan Chamber's member companies and account for 44 percent of U.S. GDP, create two-thirds of net new jobs, and employ nearly half of America’s workers. Now, millions of main street small businesses – especially Black- and brown-owned small businesses – are struggling to make ends meet in the wake of the COVID-19 pandemic and resulting economic crisis.

Yet, as the Associated Press notes, the first round of the Paycheck Protection Program,
which began April 3 and ended Aug. 8 and handed out 5.2 million loans worth $525 billion, did not distribute funding equitably. An Associated Press analysis of data from this first round showed "that many minority owners desperate for a relief loan didn’t receive one until the PPP’s last few weeks, while many more white business owners were able to get loans earlier in the program."

Today, the Biden-Harris Administration and the Small Business Administration announced five changes to the Paycheck Protection Program to make relief more accessible to small employers:

  • Establish a 14-day, exclusive PPP loan application period for businesses and nonprofits with fewer than 20 employees starting Wednesday, Feb. 24 at 9:00 a.m. EST.
  • Allow sole proprietors, independent contractors, and self-employed individuals to receive more financial support by revising the PPP’s funding formula for these categories of applicants.
  • Eliminate an exclusionary restriction on PPP access for small business owners with prior non-fraud felony convictions, consistent with a bipartisan congressional proposal.
  • Eliminate PPP access restrictions on small business owners who have struggled to make federal student loan payments by eliminating federal student loan debt delinquency and default as disqualifiers to participating in the PPP.
  • Ensure access for non-citizen small business owners who are lawful U.S. residents by clarifying that they may use Individual Taxpayer Identification Number (ITIN) to apply for the PPP.

The latter four changes will be implemented by the first week of March.

Need help navigating the PPP application process? We've got you covered!

The Chamber's REACH program, along with the Business Health Trust, are sponsoring accounting services for small business in need of PPP and/or ERC assistance. These services are available to any business in the region with 100 employees or fewer who needs accounting assistance for either of those two programs.


Email leighj@seattlechamber.com and she will connect you with a CPA from Clark Nuber


How  these changes improve equity and access to PPP

  • Offering a dedicated period for businesses with fewer than 20 employees can apply for relief through the Program: 98 percent of small businesses have fewer than 20 employees. They are Main Street businesses that anchor our neighborhoods and help families build wealth. And while the Biden-Harris administration has directed significantly more relief to these smallest businesses in this round of PPP than in the prior round, these businesses often struggle more than larger businesses to collect the necessary paperwork and secure relief from a lender. The 14-day exclusive application period will allow lenders to focus on serving these smallest businesses. The Biden-Harris administration will also make a sustained effort to work with lenders and small business owners to ensure small businesses take maximum advantage of this two-week window.
  • Helping sole proprietors, independent contractors, and self-employed individuals receive more financial support. These types of businesses, which include home repair contractors, beauticians, and small independent retailers, make up a significant majority of all businesses. Of these businesses, those without employees are 70 percent owned by women and people of color. Yet many are structurally excluded from the PPP or were approved for as little as $1 because of how PPP loans are calculated. To address this problem, the Biden-Harris administration will revise the loan calculation formula for these applicants so that it offers more relief, and establish a $1 billion set aside for businesses in this category without employees located in low- and moderate-income (LMI) areas.
  • Consistent with a bipartisan bill, eliminating an exclusionary restriction that prevents small business owners with prior non-fraud felony convictions from obtaining relief through the Paycheck Protection Program: Currently, a business is ineligible for PPP if it is at least 20 percent owned by an individual who has either: (1) an arrest or conviction for a felony related to financial assistance fraud within the previous five years; or (2) any other felony within the previous year. To expand access to PPP, the Biden-Harris administration will adopt bipartisan reforms included in the PPP Second Chance Act, co-sponsored by Senators Ben Cardin (D-MD), Rob Portman (R-OH), Cory Booker (D-NJ), and James Lankford (R-OK), which would eliminate the second restriction (the one-year look-back) unless the applicant or owner is incarcerated at the time of the application.
  • Eliminating an exclusionary restriction that prevents small business owners who are delinquent on their federal student loans from obtaining relief through the Paycheck Protection Program: Currently, the PPP is not available to any business with at least 20 percent ownership by an individual who is currently delinquent or has defaulted within the last seven years on a federal debt, including a student loan. 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.
  • Ensure access for non-citizen small business owners who are lawful U.S. residents by clarifying that they may use Individual Taxpayer Identification Numbers (ITINs) 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.