The Biden administration on Monday announced that the federal government’s Paycheck Protection Program will be available only to small businesses with fewer than 20 employees during an upcoming two-week period.
The special period, which is slated to start Wednesday, comes after PPP loans last year went to some larger businesses and publicly traded companies, leading to a backlash and returns of the money. It’s part of a revamp of the PPP, which has been a centerpiece of the government’s bipartisan aid efforts for small businesses.
“I’m announcing additional changes to the PPP program that will make sure we look out for the mom-and-pop businesses even more than we already have,” President Joe Biden said in a short speech on Monday afternoon.
While the new 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 White House said in a news release. “The 14-day exclusive application period will allow lenders to focus on serving these smallest businesses.”
The Biden administration also is changing the PPP so small-business owners with non-fraud felony convictions can obtain the program’s forgivable loans, said the White House release. In addition, officials are opening up the program to business owners who are delinquent on student loans, as well as to those who are non-citizens but legal U.S. residents.
Another change is to establish a $1 billion set aside for sole proprietors, independent contractors and self-employed individuals, according the release, which added that such enterprises tend to be owned by women and people of color.
“I want to be clear: The Paycheck Protection Program is a bipartisan effort. Democrats and Republicans helped pass it,” Biden said. “But Democrats Republicans have also voiced concerns about improving it. With their input, that’s what we’re doing in our administration.”
Biden’s $1.9 trillion COVID-19 relief plan, which he rolled out a month ago, didn’t include new PPP money but instead proposes a new $15 billon grant program for small businesses. A counter-offer from 10 Republican senators calls for $40 billion for the PPP. The Democratic-run House and Senate are working toward enacting Biden’s plan without any Republican support.
Related: Biden says he’s open to making his $1.9 trillion aid plan ‘cheaper’
Small businesses have been hammered by the COVID crisis, with one report saying that most businesses listed on Yelp that closed during the pandemic will stay shut permanently.
“They’re the glue and the heart and soul of our communities, but they’re getting crushed,” Biden said on Monday. “Since the beginning of this pandemic, 400,000 small businesses have closed — 400,000 — and millions more are hanging by a thread. It’s hurting Black, Latino and Asian-American communities the hardest.”
There have been more than 7 million PPP loans approved, providing a total of about $663 billion, according to data from a Small Business Administration tracker as of Sunday.
U.S. stocks on Monday were mostly losing ground after the main equity benchmarks SPX, -0.31% DJIA, +0.34% COMP, -1.55% delivered a mixed performance last week.
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