PPP Loans Expand Eligibility to Sole Proprietors, Contractors, Self-Employed & Minority Owners

The Biden-Harris administration recently announced changes to the requirements for PPP loans to make them more available to more kinds of small businesses. Within the next week or so, the program will open to better serve businesses with few or no employees, such as sole proprietors, independent contractors and self-employed individuals such as house cleaners and personal care providers. They previously were excluded altogether or received as little as $1 because the loan amounts were calculated based on the number of employees.

Alongside those additional inclusions, starting this Wednesday, February 24, a special 14-day window opens to give very small businesses an very clear advantage in securing forgivable Payroll Protection Loans – for the next 2 weeks, only applications from businesses with fewer than 20 employees will be accepted. The White House noted that 98% of American small businesses have fewer than 20 employees.

Administration officials also said that many minority-owned and very small businesses in low-income areas have not yet been able to apply. Therefore, with approximately $150 billion of PPP money still available, the program will also reserve $1 billion specifically for businesses without employees in low-and moderate-income areas, organizations mostly owned by women and people of color.

In addition, there will be reform, removal or relaxation of some previous barriers to applicants:

  • Legal residents who are not citizens, such as green card holders, cannot be excluded.
  • Business owners currently delinquent on student loans will be able to participate.
  • Business owners with non-fraud felony arrests or convictions will not be restricted unless they are currently incarcerated.
President Biden said that the changes will “make sure we look out for the mom-and-pop businesses even more than we have.”
He added, “We will ensure every dollar is spent well. These changes will bring much-needed, long overdue help to small businesses who really need help staying open, maintaining jobs and making ends meet… Getting our economy back means bringing our small businesses back. And that’s what we’re going to do and that’s what I’m doing today.”

Since the program reopened, more than $134 billion has been lent to 1.8 million US small business owners. Around half of the funds allocated in December remain and will continue to be available through March 31, while the current Democrat-backed Relief Bill making its way through Congress may add up to another $7 billion to the program and further expand its eligibility to more of America’s nonprofit organizations.

For more details, see the fact sheet released from The White House and a full video of the White House announcement.

If you need help navigating the PPP application process, the Kitsap Small Business Development Center offers free assistance to all.