US President Joe Biden announces changes to the Paycheck Protection Program (PPP) for small businesses
Washington (AFP) - Aiming to help the smallest American businesses that have been overlooked amid the coronavirus pandemic, President Joe Biden unveiled reforms to a vital aid program on Monday.
The Paycheck Protection Program (PPP) has been a key lifeline to businesses during the Covid-19 crisis, but the smallest among them, those least likely to have relationships with banks, often missed out.
“America’s small businesses are hurting, and hurting badly, and they need help now,” Biden said in an announcement at the White House.
“When the Paycheck Protection Program was passed, 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.”
He said the government will open a two-week window starting on Wednesday during which only firms and non-profit groups with fewer than 20 employees will be able to apply for relief.
That 14-day period will give banks and lenders time to target the 98 percent of the smallest businesses that fall in that category to receive loans, which in most cases are forgiven.
Many of those are owned by women and people of color, especially shops where the owner is the sole employee.
Biden said 400,000 small businesses have closed their doors since the coronavirus crisis erupted roughly a year ago.
“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,” he said.
These businesses often struggle more than larger businesses to collect the necessary paperwork and secure relief from a lender, he noted.
The changes also will alter the PPP to ensure that sole proprietorships can receive sufficient aid, and remove restrictions on loans for business owners who either have a criminal record in the past year or are delinquent on federal student loan payments.
It also will reform the program to provide funding to legal immigrants.
- Call for stimulus -
The Small Business Administration (SBA), which administers the PPP, said earlier this month that the program has approved $103 billion in loans to more than 1.4 million small businesses.
On Monday, the SBA said funding to firms with fewer than 10 workers jumped 60 percent in the latest round.
The aid program was approved in late March 2020 as part of the $2.2 trillion CARES Act to help firms forced to shut down because of the global health crisis, or that saw earnings collapse.
The $600 billion stimulus program approved by Congress in December opened a new $284 billion round of PPP financing.
The program drew intense criticism when major national chains drained the loans quickly, although some returned the aid after an outcry.
Biden said his administration is tightening oversight to “ensure every dollar is spent well.”
He again called on lawmakers to approve his $1.9 trillion American Rescue Package which, among other things, provides $15 billion in targeted aid to small businesses.
“More than 70 percent of the American people, including a majority of Republicans, want us to act,” he said.
The plan is working its way through the House of Representatives, and Democrats want to approve the package before March 15, when expanded unemployment benefits are set to run out.
To critics who say the plan is too big, Biden responded, “What would you have me cut? What would you leave out?”
“Getting our economy back means bringing our small businesses back.”