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PPP Temporarily Closing to Firms With 20+ Employees

Mary Ellen Biery
February 23, 2021
Read Time: 0 min

PPP Limits Applications to Small Firms Starting Feb. 26 for 14 Days

The goal is to reach the smallest and neediest firms, according to the SBA and Biden White House.

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Lasts 14 Days

PPP open only to firms with < 20 employees

The SBA is closing its Paycheck Protection Program application portal to businesses and nonprofits with 20 or more employees for the next 14 days starting Wednesday as it tries to make sure the smallest and neediest businesses receive loans.

Under several changes announced Monday, the SBA will only accept PPP applications from businesses and nonprofits with fewer than 20 employees starting at 9 a.m. ET Feb. 24.

Shifts in the program will require new borrower applications, new rules and additional guidelines and come as the PPP has 37 days before it expires, barring an extension by Congress.

“While the Biden-Harris administration has directed significantly more relief to these smallest businesses in this round of PPP than in the prior round, these businesses often struggle more than larger businesses to collect the necessary paperwork and secure relief from a lender,” the White House said in announcing the changes to the PPP. “The 14-day exclusive application period will allow lenders to focus on serving these smallest businesses.”

“The 14-day exclusive application period will allow lenders to focus on serving these smallest businesses.”

Loans in Process

SBA pledges to work with PPP loans in process

SBA officials said during a webinar with lenders that any loans for businesses with 20 or more employees must be in the SBA’s system by 9 a.m. Wednesday to continue being processed during the 14-day window. Applications with 20 or more employees will be rejected, they said. They also noted that when counting employees, each person on the payroll counts as an employee, whether the worker is part-time, full-time, or seasonal.


SBA staff will work with lenders to process and approve any applications for larger businesses that are currently being held up by hold codes and compliance check codes. But it will not accept new applications from them during the 14-day “exclusivity period” for small businesses, which will end March 9.

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Additional Changes

Sole props, owners with bad student debt benefit

Other major changes outlined Monday will require revisions to regulations and the borrower application. The SBA is targeting the first week of March to have all of those completed to incorporate the following changes:

  • Schedule C filers can use gross income - Revising the formula for calculating the maximum loan amount for borrowers filing IRS Form 1040 Schedule C so that they can calculate their PPP loan amount using the gross income listed on line 7 of the Schedule C rather than the net income on line 31. That should allow sole proprietors, independent contractors, and self-employed individuals to receive more financial support. It will also provide these borrowers with the same benefits that farmers and ranchers filing on Schedule F are allowed currently. The Biden Administration and the SBA also announced that $1 billion of PPP funding would be set aside for Schedule C applicants that don’t have employees and that are located in low- to moderate-income Census tracts.
  • Owners with prior non-fraud felonies can apply - Eliminating a restriction that excludes PPP access for small business owners with prior non-fraud felony convictions. Currently, a business is ineligible for PPP if it is at least 20 percent owned by an individual who has either: (1) an arrest or conviction for a felony related to financial assistance fraud within the previous five years; or (2) any other felony within the previous year. Noting it is consistent with a bipartisan Congressional proposal, the SBA said the first restriction related to fraud will remain, but the SBA will begin allowing applications from people with non-fraud felony convictions  unless the applicant or owner is incarcerated at the time of the application.
  • Owners with delinquent student debt can apply - Eliminating delinquent student debt as a disqualifier to PPP loans for small businesses. The SBA has been running checks of the Treasury Department’s Do Not Pay list for business owners with student loan debt delinquency and has been placing hold codes/compliance error codes on any owners flagged for delinquency. SBA officials said they will remove the remove the codes for student loan debt going forward.
  • ITINs will be acceptable for lawful non-citizen applicants - Issuing guidance to clarify that lawful non-U.S. citizens that are business owners who otherwise meet PPP requirements are already eligible for PPP loans. Earlier in this round of funding, the SBA was not accepting applications from non-citizens using Individual Taxpayer Identification Numbers (ITINs) to apply for the PPP, but the SBA will begin accepting them once they issue the appropriate changes to the guidance.

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About the Author

Mary Ellen Biery

Senior Strategist & Content Manager
Mary Ellen Biery is Senior Strategist & Content Manager at Abrigo, where she works with advisors and other experts to develop whitepapers, original research, and other resources that help financial institutions drive growth and manage risk. A former equities reporter for Dow Jones Newswires whose work has been published in

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