President Biden announced changes to the Small Business Administration’s Payroll Protection Program he said would improve small business’ access to the loans. The most dramatic change is a two-week period starting February 24, during which time only companies with 20 or fewer employees will be allowed to apply for loans through the program.
“When the Payroll Protection Program was passed, a lot of these mom-and-pop businesses just got muscled out of the way by bigger companies who jumped in front of the line,” said Biden, in remarks at the White House. “Getting our economy back means bringing our small businesses back.”
In addition to the two-week exclusive period, the Small Business Administration confirmed changes to open access to the PPP to more applicants by removing restrictions on business owners with non-fraud-related criminal records, consistent with a bill proposed by a bipartisan group of four senators, and remove a similar restriction for applicants who are delinquent on student loan debt.
The SBA also issued a clarification that says small business owners who are lawful residents but not U.S. citizens can get loans using their individual taxpayer identification number.
According to information released by the White House, small businesses make up 44% of U.S. GDP and employ almost half of U.S. workers. The Biden Administration also said that the share of funding in the PPP going to companies with fewer than ten employees is up 60% at present than it was a year ago.
The Payroll Protection Program, to date, has approved almost 9 million loans, 1.9 of them in 2021, for a total of $802 billion in loans.
But, Biden says, the expanded PPP access is only the beginning for his plan to reenergize the economy. “This is a starting point, not the ending point,” he said in remarks at the White House, and exhorted Congress to pass his “American Rescue Plan” and asked critics of its price what they would leave out of it.
His speech did not explicitly reference a rival plan put forward by a group of 10 Senate Republicans, which would cost $600 billion, but Press Secretary Jen Psaki said that plan “falls far, far short of what is needed at this point in time.”
Where additional small business relief is concerned, Biden’s plan includes $15 billion in small business grants and $25 billion in low-interest loans where the Republican plan offers $50 billion for low-interest loans alone.
However, Biden’s plan also includes a $15 minimum wage, which Republicans say would be hard on small businesses in particular, as well as an extra $400 per week in unemployment insurance benefits through September. That’s in contrast to the Republican plan, which would only add $300 per week in extra unemployment benefits through the end of June. Critics of expanded unemployment insurance say increasing unemployment insurance by too much can discourage employees from returning to work and make it harder for businesses to hire.