The Register Citizen (Torrington, CT)
Loan program shifts its focus to help smallest U.S. businesses
More than 22,000 Connecticut businesses have been approved for nearly $2 billion in forgivable loans since the federal government reopened the popular Paycheck Protection Program in January, and now the Small Business Administration will aim squarely at loans for the smallest businesses.
On Wednesday, the SBA launched a two-week period where PPP loans are only available to businesses that have fewer than 20 employees.
Starting next week, the SBA will also revise its funding formula to allow more sole proprietors, independent contractors and self-employed people to get the assistance. The SBA is also setting aside $1 billion to help these businesses in low and moderate-income communities.
“These small businesses — not the ones with 500 employees, but these small
businesses that, with a handful of folks, they are 90 percent of the businesses in America,” President Joe Biden said as he announced the changes Monday. “But when the Paycheck Protection Program was passed, a lot of these mom-and-pop business just got muscled out of the way by bigger companies who jumped in front of the line.”
Small businesses employ over 700,000 Connecticut residents, U.S. Rep. Jim Himes, D-4, said as he praised the window for the smallest companies to apply. “It's critically important that federal assistance programs, such as the Paycheck Protection Program, are readily available to mom-and-pop businesses,” he said.
Starting next week the PPP will be open to people with a non-fraud felony conviction, people who are delinquent on student debt payments and U.S. residents who are not citizens but are lawful residents, the Biden administration announced.
The latest round of PPP reopened a month ago, allowing small businesses to get forgivable loans to cover payroll and other costs. Companies with 500 employees or fewer can still apply for their first PPP loan or some companies with fewer than 300 employees that can demonstrate a 25 percent reduction in gross receipts between comparable quarters in 2019 and 2020 can get a second loan, too.
Catherine Marx, Connecticut’s SBA District Director, said the agency is doubling its outreach to inform the smallest businesses in all neighborhoods will be able to tap the funds. The program closes March 31 or when funding runs out.
Since PPP reopened on Jan. 11, the SBA has approved 1.8 million loans nationwide for a total of $134 billion. In Connecticut, 22,669 Connecticut small businesses and entities have been approved for PPP loans totaling $1.9 billion as of Feb. 21.This follows millions of PPP loans previously approved nationwide by the SBA in the spring and summer.
The program was initially envisioned as a means to help businesses that had to temporarily shut their doors due to the pandemic keep employees on the payroll. As the pandemic has continued for a year, the program has become the primary way the government is trying to stave off a tsunami of small business closures.
Initially, the Paycheck Protection Program was swamped with applications from larger companies and partnerships including regional law firms; retail and restaurant chains; and publicly-traded corporations that fit the size limits. Banks were criticized for helping wealthier business clients with their applications before smaller, less-connected shops and companies.
Democrats and Republicans have made a concerted effort to curb loans to bigger companies that may not need the relief, by adding stricter eligibility criteria to the second round loans.
Biden also promised more oversight of the program Monday.
“I invite any inspector general in this program, with jurisdiction over this program, to closely look at these loans and report — publicly report on any issues they uncover inconsistent with what I'm saying today,” Biden said. “We will ensure every dollar is spent well. These changes will bring much-needed, longoverdue help to small businesses who really need help staying open, maintaining jobs and making ends meet.”