President Joe Biden announced changes to the Paycheck Protection Program (PPP) Monday afternoon, including a two-week window that only allows businesses with fewer than 20 employees to apply for loans, and efforts to increase racial equity.
"Small businesses are the engines of our economic progress. They're the glue, and the heart and soul of our communities. But they're getting crushed," Biden said during remarks at a White House event to unveil the changes.
The program received $284 billion for small business loans as part of December’s $900 billion COVID-19 relief package and reopened to lenders and borrowers on Jan. 11.
Administration officials say in the first month, the Small Business Administration has approved about $134 billion in forgivable small business loans to about 1.8 million small businesses for an average loan size of about $74,000. About 80% of those loans have gone to businesses with less than 10 employees.
If passed, Biden’s $1.9 trillion American Rescue Plan, which could see a floor vote in the House by the end of the week, would also add another $7 billion into the program. Biden used his Monday speech as an appeal to lawmakers to support passing the bill.
"This is a starting point, not the ending point. We need Congress to pass my American Rescue Plan," Biden said.
The Paycheck Protection Program has been popular with lawmakers on both sides of the aisle, and Biden attempted to capitalize on that popularity in his remarks.
"It's my hope -- my hope -- that as Democrats and Republicans who have backed the PPP program, that Democrats and Republicans will back the American Rescue Plan," he said.
Among the improvements Biden announced Monday is a 14-day period, starting on Wednesday at 9 a.m. ET, where only businesses with fewer than 20 employees can apply for relief. That ends on March 9 at 5 p.m. ET. Administration officials said this would allow lenders to focus on serving the smallest businesses.
In an attempt to improve equitable distribution of loans, administration officials said changes would also be aimed at helping sole proprietors, independent contractors and self-employed individuals to receive more financial support by revising the program’s funding formula. Of these businesses, those without employees are 70% owned by women and people of color, and with previous PPP calculations, some were approved for as little as $1 in loans. At least $1 billion is also being set aside for businesses in this category.
Officials said the Small Business Administration would revise the loan calculation formula to match the approach authorized by Congress in the Economic Aid Act for small farmers and ranchers.
Biden also eliminated restrictions that prevent small business owners with prior non-fraud felony convictions from obtaining relief through the PPP, preventing small business owners who are delinquent on their federal student loans from obtaining relief.
The president is attempting to make it easier for those with green cards or on a visa to get aid as well. Administration officials said small business owners who are lawful U.S. residents could use an Individual Taxpayer Identification Number (ITNs) to apply.
Officials said they are closely monitoring the flow of funds and aren’t currently asking Congress to extend the March 31 expiration date for the program.