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Back to Basics: Small Businesses Given Priority for PPP Loans

BRYAN JOHNSON
FEBRUARY 25, 2021


At the very heart of the Paycheck Protection Program, originally set forth as part of the CARES Act, was the push to help small businesses and other covered entities stay afloat and to incentivize them to keep employees on their payrolls despite coronavirus-related declines in business. The key word there is “small,” as amplified in an announcement made by President Joe Biden this week.

Beginning yesterday (Wednesday), businesses with less than 20 employees will be given priority access to the latest incarnation of PPP loans. In fact, for two weeks, the Small Business Administration will only accept applications for PPP loans from firms employing fewer than 20 workers.

The net effect of limiting initial PPP applications to companies such as these will be to target more federal pandemic assistance to the nation's smallest businesses and ventures, including those owned by women and people of color.

Currently, there is approximately $150 billion still available for PPP loans. In an effort to expand access to this funding, the Biden administration is also making the following changes to the PPP:

• Increasing loan amounts for the self-employed (sole proprietors and individual contractors)
• Eliminating restrictions around delinquent student loan debt and non-fraud felony convictions
• Allowing some non-citizen business owners to apply

Qualifying companies (those with less than 20 employees) can apply for either a first or second draw PPP loan, depending upon their individual circumstances (this applies to larger businesses too, though they will have to wait two weeks to submit their applications). That being said, for a second round of funding to be forgivable, businesses must have spent or plan to spend the entirety of their first loans and show a drop in revenue of 25% or more in any quarter of 2020.

As always, the attorneys in Michelman & Robinson, LLP’s COVID-19 Practice Group are available to answer any of your PPP-related questions.


We are working diligently to keep our clients up to date on coronavirus-related developments. Nevertheless, these developments are changing daily and, in some cases even hourly, so it is important that you make sure you are dealing with the most current information. That being said, this alert is not offered, and should not be relied on, as legal advice. You should consult an attorney for guidance and counsel regarding any specific concern or situation.