The Biden administration is stepping in after Paycheck Protection Program loans went to some not-so-small businesses the first time around.
Compared to the first round issued last year, the latest round of pandemic relief loans have gone to far more very small businesses, businesses in rural areas, and minority-owned businesses. But the Biden administration is still implementing reforms to ensure the loans keep going to businesses with fewer than 20 employees and focus the reforms on people who need them most, it announced Monday.
After one month, 60 percent more of this round's PPP loans have gone to businesses with fewer than 10 employees this time around, and more than 30 percent more have gone to rural businesses. But starting Wednesday, the Biden administration will only allow businesses with fewer than 20 employees to apply for the loans for 14 days so lenders can prioritize those businesses. The changes also open up the loans to people with non-fraud felony convictions, in accordance with a bipartisan bill waiting for consideration in the Senate, and to non-citizen business owners.
Biden also laid out modifications aimed at tackling "waste, fraud, and abuse across all federal programs" after billions of dollars of the last round of loans were flagged for potential fraud. Getting approved for a PPP loan is now "contingent on passing [Small Business Association] fraud checks, Treasury's Do Not Pay database, and public records," the White House said. Changes to the PPP loan application and further engagement with loan recipients are also aimed at better targeting who needs relief most.