President Biden announced yesterday that, from Feb. 24 until March 9, businesses with fewer than 20 workers will gain exclusive access to $284 billion in loans under the Paycheck Protection Program (PPP).
Small businesses account for 44% of gross domestic product and employ nearly half of U.S. workers, the White House said in a statement, noting that 98% of the businesses have fewer than 20 workers.
- "Small businesses are the engines of our economic progress — they're the glue and the heart and soul of our communities — but they're getting crushed," Biden told a news conference, adding that 400,000 small businesses have shut down since the start of the pandemic, "and millions more are hanging by a thread."
Congress in December approved a new round of forgivable PPP lending totaling $284 billion, aiming to cushion small businesses and their employees against losses stemming from the coronavirus.
The Small Business Administration (SBA) has faced criticism that $525 billion in PPP lending last year did not sufficiently help businesses in economically distressed communities identified under the historically underutilized business zones (HUBZones). Such businesses received just one-quarter of PPP aid in 2020, according to analysis by the Tax Policy Center.
During PPP lending last year, "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," Biden said.
In the current round of PPP lending, the Biden administration "has made delivering equitable relief to hard-hit small businesses a top priority," the White House said. The smallest businesses "often struggle more than larger businesses to collect the necessary paperwork and secure relief from a lender."
SBA has pushed up the share of funding to rural businesses by nearly 30% and to businesses with fewer than ten employees by nearly 60% compared with lending in 2020, according to the White House. Funding channeled through Community Development Financial Institutions and Minority Depository Institutions has surged this year by more than 40%.
The SBA will "remove barriers that have stopped many businesses from being able to apply for these loans," Biden said.
The SBA will revise the PPP loan calculation formula with the aim of providing more relief to sole proprietors, independent contractors and self-employed individuals, the White House said. It will set aside $1 billion for such businesses located in low- and moderate-income areas.
The SBA will also eliminate a ban on PPP loans to small business owners who are delinquent on federal student loans or who have a record of non-fraud felony convictions, according to the White House.
"At the same time, we're increasing access by increasing oversight," Biden said.
The SBA—unlike during PPP lending in 2020—will make loan guaranty approval contingent on passing SBA fraud checks, the U.S. Treasury’s Do Not Pay database and other public records, the White House said. The SBA now manually reviews the largest PPP loans and randomly checks other loans.
"I invite any inspector general in this program with jurisdiction over this program to closely look at these loans and report—publicly report on any issues they uncover," Biden said. "We will ensure every dollar is spent well."
Early last year businesses shut down as the coronavirus spread and, by April, unemployment surged to 14.7%, the highest rate since the start of such recording keeping in 1948, according to the U.S. Bureau of Labor Statistics.
PPP lending last year softened the blow from COVID-19, helping 5.2 million small businesses maintain employment for 51 million U.S. workers, according to the SBA.