Illustration for article titled How To Finally Get A PPP Loan For Your Small BusinessPhoto: Bignai (Shutterstock)

President Biden today announced changes as part of the COVID business loan aid program, which targets small and minority businesses that were left out in previous aid rounds. The changes make qualification easier and include an exclusive 14-day window in which small business owners can apply for loans from Wednesday. Here’s what you need to know.

Changes to the Paycheck Protection Program

Of the $ 284 billion that Congress has allocated for another round Paycheck Protection Program (PPP) Loans in December only made $ 134 billion to small businesses, according to USA Today. Like Biden before criticized The PPP program is not intended to reach the intended recipients. The following reforms are designed to fill the gap.

Illustration for article titled How To Finally Get A PPP Loan For Your Small Business

  • From Wednesday small companies with fewer than 20 employees (which is not applicable 98% all small businesses) have an exclusive 14-day window to apply for credit. Companies with more than 20 employees cannot apply for a loan during this time.
  • The program’s loan calculation formula will be adjusted so that independent contractors, sole proprietorships and the self-employed will have a better chance of obtaining the loans. The Biden Administration says Many repair companies, beauticians, and small independent retailers have either been excluded from the program or approved for very low loan amounts, sometimes as low as $ 1.
  • President Biden will allocate $ 1 billion exclusively to sole proprietorships with no employees in low and middle income areas. From these companies without employees, 70 percent are owned by women and minorities.
  • Biden will also lift restrictions preventing small business owners from applying for loans if they are not committing fraudulent crimes, have defaulted on their federal student loans, or have been green card or in-state Visa holders.

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How PPP Loans Work

Under the CARES Act, the PPP program was intended to help small businesses cover costs during the pandemic. Initial loans are capped at 2.5 times the average monthly wage bill, with a maximum of $ 10 million at a fixed rate of 1%. according to the Small Business Administration (SBA). However, loans can be granted if a company spends at least 60% of the money on wages and salaries such as wages or health insurance and a maximum of 40% on other qualified expenses such as rent or ancillary costs.

The program expires in late March and another renewal of the program is underway not included in Biden’s $ 1.9 trillion relief plan now winding its way through Congress.

Apply, Visit the SBA’s PPP website on Wednesday when small business applications are accepted. For more general information on PPP loans, see Here.