Biden to boost pandemic lending to smallest businesses, many owned by women and people of color
President Biden announced changes Monday to target more federal pandemic assistance to the nation’s smallest businesses and ventures owned by women and people of color.
A lot of these mom-and-pop businesses “got muscled out of the way” by larger businesses seeking federal money in the early days of the pandemic, Biden said. He said changes slated to take effect Wednesday will provide long-overdue aid to these smaller enterprises that he said are being “crushed” by the pandemic-driven economic downturn.
“America’s small businesses are hurting, hurting badly, and they need help now,” Biden said.
Under the pandemic-era Paycheck Protection Program, the administration is establishing a two-week window, starting Wednesday, in which only businesses with fewer than 20 employees — the overwhelming majority of small businesses — can apply for the forgivable loans.
Biden’s team is also carving out $1 billion to direct toward sole proprietors, such as home contractors and beauticians, the majority of whom are women and people of color.
Other efforts will remove a prohibition on lending to a company with at least 20% ownership by a person arrested or convicted for a nonfraud felony in the prior year, as well as allowing people behind on their federal student loans to seek relief through the program. The administration is also clarifying that noncitizen legal residents can apply to the program.
The Federal Reserve cut the minimum loan size in its Main Street Lending Program and is letting banks earn more for facilitating loans under $250,000.
First rolled out in the earliest days of the COVID-19 pandemic and renewed in December, the program was meant to help keep Americans employed during the economic downturn. It allows small and midsize businesses dealing with loss of revenue to access federal loans, which are forgivable if 60% of the loan is spent on payroll and the balance on other qualified expenses.
The Biden effort is aimed at correcting disparities in how the program was administered by the Trump administration.
Data from the Paycheck Protection Program released Dec. 1 and analyzed by the Associated Press show that many minority owners desperate for a relief loan didn’t receive one until the PPP’s last few weeks, while many more white business owners were able to get loans earlier in the program.
The first round of the program, which began April 3 and ended Aug. 8 and handed out 5.2 million loans totaling $525 billion, helped many businesses stay afloat when government measures to slow the coronavirus’ spread forced many to shut or to operate at diminished capacity.
The current round of the program, which began Jan. 11 and runs through the end of March, has paid out $133.5 billion in loans — about half of the $284 billion allocated by Congress — with an average loan of nearly $74,000.
A further renewal of the program is not included in Biden’s $1.9-trillion American Rescue Plan, which he hopes Congress will pass in the coming weeks.
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