President Biden announced on Monday that he would make it easier for certain small business owners to access federal financial relief programs enacted in response to the COVID-19 pandemic and recession.
Congress created the Paycheck Protection Program (PPP) through the CARES Act, which became law in April of last year. The program provides critical financial relief to small businesses in the form of forgivable loans, so that businesses can remain afloat during temporary lockdowns and the economic downturn and avoid permanent closure.
But the original PPP eligibility requirements were, at times, opaque and restrictive. The rules indicated that small businesses owners with past felony convictions or those in poor standing on federal student loan debt could be blocked from benefiting from the program. Meanwhile, lawmakers and activists criticized the administering of the PPP program, which benefited many large, publicly traded companies, while smaller partnerships and sole proprietorships were initially unable to gain access to funding.
President Biden announced changes on Monday designed to address these issues. The new rules increases the amount of PPP funding that sole proprietors are eligible to receive, and also institutes a two-week freeze on funding for larger companies with 20 or more employees, so that smaller businesses have an adequate opportunity to apply for funding now.
The new rules also change the eligibility criteria of PPP loans for those with past felony convictions or defaulted federal student loans. The changes will allow business owners with past convictions that are not related to fraud to apply for PPP funding. In addition, owners who have defaulted or become delinquent on federal student loan debt are no longer barred from the program.
“These changes will bring much-needed, long overdue help to small businesses who really need help staying open, maintaining jobs and making ends meet,” Biden said on Monday.
Last month, President Biden issued an executive order extending the moratorium on federal student loan payments, interest, and collections to September 30, 2021. That relief was also originally established via the CARES Act. But even though the government suspended collections efforts on most defaulted federal student loans, business owners with defaulted federal student loan debt were unable to obtain PPP loans to keep their business afloat.
The new changes are scheduled to take effect on Wednesday.