Many smaller businesses have felt shut out from PPP (Paycheck Protection Program) loans as they watched the money meted out to larger companies. In fact, the SBA reported that while 98% of small businesses employ fewer than 20 people, they’ve only received 45% of PPP funding. For the next two weeks (starting Wednesday, February 24), small businesses will be the only companies allowed to apply for forgivable loans.
According to an article from MSN Money, applicants should keep these three things in mind:
You can apply for either a first or second draw of funds
If you're self-employed, you can get more forgivable funding
Apply as soon as possible as funds are limited. The sooner you apply the better chance you have of getting some of these funds and the more opportunity you'll have to apply for a second draw.
In announcing this opportunity, the Biden administration stated it hoped to include more women and minority owned companies as a greater percentage of them were small businesses and more likely to have been passed over for PPP loans. Biden stated that 400,000 small businesses have closed during the pandemic, while many more face an uncertain future.
Making up for lost time
This is to make up for much of what happened last year, when larger companies got loans – sometimes fraudulently – and smaller companies were left out. “These [small] businesses often struggle more than larger businesses to collect the necessary paperwork and secure relief from a lender,” stated a White House news release. “The 14-day exclusive application period will allow lenders to focus on serving these smallest businesses.”
There are also changes in eligibility requirements that formerly restricted applicants who had defaulted on their student loans, had prior felony convictions, or were non-citizens.