Small Businesses with 20 employees or less are being prioritized for PPP loans starting February 24
The Biden administration made changes to the pandemic aid program aiming to help the smallest of
businesses, sole proprietors, and minority-owned firms. While the Paycheck Protection Program (PPP) has
been helping small businesses and their employees since April of 2020, some of the smaller businesses
have had trouble accessing these forgivable loans. For two weeks, starting Wednesday, February 24, the
Small Business Administration will only accept PPP applications for firms with fewer than 20 employees.
The administration is hoping this will even out the allocations of the loan throughout small businesses.
An eligible business can apply for a first or second-round draw of funds. To qualify for the second round you
must have spent or plan to spend all of the first round loans and show a 25% drop in revenue in any quarter
of 2020. For a regular business with employees, these loans are normally 2.5 times payroll costs, but for a
one-person firm that doesn’t have a payroll, you may have been at a disadvantage. To change this, the
SBA will be recalculating the loan amounts from gross income instead of net profit, increasing the
amount the business will receive. As always, applying sooner than later is key as funding is limited.
The professionals at The Center for Financial, Legal, and Tax Planning, Inc. are more than knowledgeable with regards to reducing your tax burden using proceeds from PPP loans. Please contact us at (618) 997-3436 for more information.