SBA Hot Topic Tuesday  – Upcoming Changes to the Paycheck Protection Program The Biden-Harris Administration and the SBA announced yesterday that they will be taking steps to further promote equitable relief for America’s mom-and-pop businesses by revising certain aspects of PPP. Here is what we currently know about the changes: The 14-day Exclusivity Period for Businesses With Less Than 20 Employees
  • From 9:00 am on February 24, 2021, through midnight on March 9, 2021, the SBA will only accept applications from borrowers with fewer than 20 employees.
  • Applications already submitted by lenders to the SBA before the start of the exclusivity period will still be processed.
  • During the exclusivity period, SBA will reject any new applications that have 20 or more employees.
  • When counting employees, each employee counts as one regardless of whether they are full-time, part-time, or seasonal.
The Revised Formula for Schedule C Filers
  • Beginning in early March, Schedule C filers will be able to calculate their maximum PPP loan amount using the gross income on line 7 of IRS Form 1040 Scheule C rather than line 31.
  • Additionally, $1 billion will be set aside for Schedule C applicants that do not have employees and that are located in low- and moderate-income (LMI) areas.
Elimination of the Exclusionary Restriction on Small Business Owners with Felony Convictions
  • In March, the SBA will eliminate restrictions on businesses with owners who have prior non-fraud convictions. However, restrictions will remain in place for borrowers with an arrest or conviction for a felony fraud within the past 5 years and those who are currently incarcerated.
Elimination of the Exclusionary Restriction on Small Business Owners with Student Loan Debt Delinquencies
  • SBA has partnered with the Department of Treasury and Education to eliminate restrictions on businesses with 20% or more owners who have student loan debt delinquencies.
  • SBA will automatically remove the hold codes for student loan debt identified through Treasury’s Do Not Pay database.
Elimination of Restrictions on Non-Citizen Business Owners
  • The SBA will be issuing guidance clarifying that non-citizen small business owners who are lawful U.S. residents (ie. green card and visa holders) may use Individual Taxpayer Identification Numbers (ITINs) to apply for relief.
The SBA will be issuing additional guidance and IFRs to reflect these changes in the coming days. Sources: SBA Connect Call (2/22/21)