Small Businesses with Fewer Than 20 Employees Given Exclusive Access to PPP Loans for the Next Two Weeks
Many smaller businesses have had difficulty in finding a lender under the Paycheck Protection Program (“PPP”), with some lenders focusing on larger businesses. To address this issue, the Biden administration announced that PPP loans will be available during an upcoming two-week period only to businesses with fewer than 20 employees. The 14-day exclusive application period, which applies to both first time and second draw loans, is designed to allow lenders to focus on serving these smallest businesses.
The two-week period is scheduled to start Wednesday, February 24, 2021.
The Biden administration is also making several changes to the program in accordance with statutory changes made by the December relief package, including the creation of a $1 billion set aside for sole proprietors, independent contractors, and self-employed individuals. In addition, the Administration is opening the program to business owners who are delinquent on student loans, business owners with prior non-fraud felony convictions and non-citizen small business owners who are lawful U.S. residents.
For businesses with 20 or more employees that have already applied for a PPP loan, initial indications from Washington officials suggest lenders can continue to process those applications. If you have applied for a PPP loan recently, we encourage you to contact your lender to verify that your application is being processed. For businesses with 20 or more employees that have yet to submit an application for a loan, WFCA suggests they prepare the application for submission, discuss the details with their lender, and file immediately after the two-week exclusive application period expires.
Borrowers can apply for the Paycheck Protection Program by downloading the First Draw PPP loan application or Second Draw PPP loan application and working with a participating PPP lender through the SBA Lender Match tool.
WFCA will continue to keep members informed and updated regarding their opportunities and obligations during the COVID-19 crisis. The Association will also continue to provide other important information that may impact members.
QUESTION FROM MEMBER:
We post questions we get from members that we know will apply to many of our members. The responses are handled by Jeff King.
Q: Can you please advise what happenes to small businesses that applied for round 2 and are stuck in limbo? Do we apply again under the new rules, or will my application be flagged and movrd up and I can qualify for a higher amount due to gross income calculations.
A: I take it that your company has under 20 employees and have filed for a PPP loan.
I understand that loans submitted prior to the official rule changes are subject to the rules in effect at the time of application. Moreover, the final rules that may increase the amount of the loan are not finalized. Accordingly, you will need to reapply to receive increased amount and you may want to wait until the new rules on calculating the amount of the loan are published to ensure you receive the maximum available. WFCA will alert members once the new rules are out.
I suggest you contact the lender with who you have an application and discuss resubmitting the application under the new rules.
Notice: The information contained in this update is abridged from legislation, court decisions, and administrative rulings, and should not be construed as legal advice or opinion, and is not a substitute for the advice of counsel.