Biden Administration Puts New PPP Focus On Smaller, Minority-Owned Firms

President Biden plans to rework the U.S. Paycheck Protection Program (PPP) so that smaller companies, those in underserved communities and those owned by minorities gain increased access to the program. The widely reported changes will kick off Wednesday (Feb. 24) with a two-week span when the program will only accept applications from those kinds of companies.

During that 14-day period, the Small Business Administration (SBA) will only accept applications from businesses with less than 20 workers. The goal is to answer criticisms of the program and make sure these companies are not crowded out by larger firms.

The PPP has been a prominent part of the stimulus aid that Congress has approved in response to the COVID-19 health and economic crisis. The federal government restarted the program last month after Congress passed a new stimulus aid package.

The program’s funding had been shut off in August as federal legislators failed to pass a new stimulus bill. The forgivable loans, aimed at small businesses, are made by financial institutions and backed by the SBA.

An administration official told The Wall Street Journal that the exclusive window will “give lenders and community partners more time to work with these Main Street businesses that anchor our neighborhoods” — and give them the time they need to apply for and receive the loans before the window of opportunity closes.

The SBA issued guidelines for applying in the new round of the program last month. The program overall is now set to end March 31.

Criticisms of the program cropped up when businesses like Shake Shack, which gave back the money, and the Los Angeles Lakers were early recipients of the program.

“I think everyone’s heart was in the right place when they came out with this loan program. They wanted this to work; they wanted to get more people employed and they wanted to save small businesses,” Judie Rinearson, partner and payment group leader at the K&L Gates law firm, told PYMNTS.  “But … I think as time has gone by, it’s become clear that this is a lot more difficult to deal with than they had originally thought.”