New Changes to the PPP Loan Program for Small BorrowersBy James (Jay) M. Brower, Jr | February 24, 2021
On February 23, 2021, the Biden administration announced that it would be making several adjustments to the Paycheck Protection Program (PPP) in the next few weeks.
On February 24, 2021, the loan application program will be suspended for at least two weeks for any potential borrowers who have more than 20 employees. This is to ensure that lenders devote sufficient resources to processing loan applications submitted by smaller borrowers.
For self-employed individuals (and potentially partnerships and S Corporations), the borrowing formula will be modified, although details on how are not yet available. Under the current program developed by the previous administration, a self-employed individual’s PPP loan amount was directly tied to the individual’s 2019 taxable profit. Businesses with a small profit or a loss could not receive any PPP funds or only received a small amount. Also, the maximum amount that a sole proprietor with no employees could receive was capped at $20,833. Under the revised program, we expect that the maximum loan amounts for self-employed individuals will increase.
The administration plans to repeal a rule preventing businesses that are at least 20% owned by an individual who is delinquent on federal student loan payments from participating in the PPP loan program.
Below are some legislative changes to the PPP and other COVID relief programs that are also likely to be on the horizon.
Allowing businesses owned by certain felons to receive PPP loans: under current law, businesses may not receive a PPP loan if a 20% or more owner was convicted of a felony in the past year (or past five years if convicted of a financial crime). If enacted, a bill pending in Congress would repeal this rule for 20% or more owners who have been convicted of a felony in the past year, unless the owner is currently incarcerated.
- The House is now considering a bill which, if enacted in its current form, would provide for the following:
- Additional stimulus payments of $1,400 per individual
- Enhanced unemployement benefits
- Enhanced Child tax credits
- Enhanced earned income
- A $15 per hour minimum wage
At this time, it seems likely that the bill will pass the House, but passage in the Senate could prove more difficult.
About James (Jay) M. Brower, Jr
Jay Brower, CPA, is a Partner of corporate and individual tax compliance and research services at Marks Paneth, LLP. He has more than 20 years of professional experience at the federal, state, and local levels. Mr. Brower's duties also include the development of tax planning and implementation strategies, as well as education and development of the firm's professionals. Mr. Brower provides tax planning and compliance services to clients in the manufacturing, commercial fishing, telecommunications, professional... READ MORE +
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