PPP Loan Forgiveness: The Ultimate Guide

Increase your chances of PPP loan forgiveness with up-to-date simplified guide covering:

How to maintain eligibilty for forgiveness and recordkeeping requirements

How and when to apply for forgiveness

Spending and expense tracking checklist

New Changes To PPP To Benefit Small(er) Businesses

Share on facebook
Share on Facebook
Share on twitter
Share on Twitter
Share on linkedin
Share on LinkedIn
Share on reddit
Share on Reddit
Share on email
Share by Email
ppp-updates

New changes attempted to get smaller business into the Paycheck Protection Program. While well-intentioned, the execution may be detrimental.

In a news conference on February 24, President Biden criticized the PPP’s early rollout for privileging larger businesses at the expense of the smallest borrowers. In an attempt to improve equitable distribution of loans, the Treasury Department announced that it will make targeted changes to its Paycheck Protection Program pandemic relief loans.

Part of those changes will be a two-week period starting on February 24 during which only businesses with fewer than 20 employees will be able to apply for Paycheck Protection Program (PPP) loans. That exclusive application window ends on March 9 at 5 p.m. ET.

Some highlights of the changes are as follows:

  • Change the PPP loan calculation formula to help sole proprietors, independent contractors, and self-employed individuals receive more financial support.
  • $1 billion will be set aside for businesses in this category that don’t have employees and are located in low- and moderate-income areas.
  • Eliminate a restriction preventing small business owners with prior non-fraud felony convictions from obtaining relief through the PPP.
  • Remove a rule preventing small business owners who are delinquent on federal student loan payments from securing a PPP loan.
  • Allow noncitizen small business owners who are lawful U.S. residents to use individual taxpayer identification numbers (ITINs) to apply for relief.

Calculation Changes

The Treasury Department announced that it will permanently change the loan calculation formula it applies to independent contractors. Previously, their loans were based on the profit they reported on their annual taxes. That disqualified unprofitable businesses — a restriction that did not apply to larger companies — and limited the size of the loans available to business owners who try to report as little taxable income as possible (as most larger businesses do).

With the new changes, loans for sole proprietors will now be based instead on gross income, a figure that excludes many expenses. That will allow unprofitable businesses to qualify and allow many applicants to collect much larger loans.

Eligibility For Non-Fraud Convicted Small Business Owners

The changes also eliminated restrictions that prevent small business owners with prior non-fraud felony convictions from obtaining relief through the PPP. These changes enable small business owners who are delinquent on their federal student loans to obtain relief.

Eligibility For Non-Citizen Resident Small Business Owners

In addition, the Biden administration 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 (ITINs) to apply.

Final Note

It is important to note that lenders don’t yet have details on how to process these changes, which Small Business Administration officials expect to be carried out early next month. What is not clear is whether the S.B.A. will not retroactively change loans that have already been disbursed, or will not let those who already got loans return them and reapply to benefit from the new changes. With that uncertainty, it may be wise to wait to submit your application until more details are available.

Something Wasn't Clear?

Feel free to contact me, and I will be more than happy to answer all of your questions.

Share on facebook
Share on Facebook
Share on twitter
Share on Twitter
Share on linkedin
Share on LinkedIn
Share on reddit
Share on Reddit
Share on email
Share by Email

How useful was this post?

Click on a star to rate it!

Average rating / 5. Vote count:

No votes so far! Be the first to rate this post.

You may also like

0 replies on “New Changes To PPP To Benefit Small(er) Businesses”

Want to speak with an experienced CPA?

Hello, I am Julian

I’m a Partner and Senior CPA at Valor CPAs with 10+ years experience.

I'd be happy to learn about your goals, and advise as needed how we can help you reach those goals.

Schedule A Call

Most Recent

Top Rated

Most Popular

Get notified of new articles.

Subscribe To Our Weekly Newsletter

Get our weekly digest of the latest accounting information to grow your business.

We use your data for communication only, and you can opt-out at anytime