A Guide to the Newest Changes to the Payment Protection Program

The pandemic has been hard on everybody, including small businesses. To help small business owners during the economic crisis, they have been allowed to take a loan through the Paycheck Protection Program (PPP).


What is the Paycheck Protection Program?

This pandemic-related economic relief opportunity has been made available to keep small businesses paying their employees. If specific requirements are met, PPP loans can be forgiven. In other words, a PPP loan is similar to a grant, except with strings attached. Those who are eligible for the Small Business Administration’s PPP loan include: While PPP loans have undoubtedly provided financial relief since its inception, their assistance didn’t seem to be enough. With 400,000 small businesses closed down because of the pandemic, it appears that something must be done to help those that continue to struggle. As such, the Biden administration seeks to encourage the smallest small businesses to apply through the recent changes implemented in the PPP.


Newest Changes to the PPP

 In February of this year, the new administration introduced several major changes to the PPP to make it more beneficial to the self-employed and the smallest employers. Some of the most significant changes to the PPP include:


1. Prioritization on Businesses With Fewer Than 20 Employees

 From February 24, 2021, to March 9, 2021, the SBA limited approvals for relief through the Payment Protection Program to organizations that have 20 employees or fewer. Through the temporary limiting of the approval process, the administration hopes that more money will reach ventures that have difficulty accessing capital.


2. Revision of the Loan Calculation Formula

 The formula for the PPP used to be based on net-profits to calculate loan amounts, which excludes sole proprietors, independent contractors, and self-employed individuals. To help borrowers without employees, the administration called to revise the loan calculation formula to focus on gross profits instead. With this change, sole proprietors, independent contractors, and self-employed individuals without net profits on their tax returns have a chance to receive relief from the Paycheck protection Program. Moreover, teh SBA also reserved a billion dollars for these kinds of businesses in low-to-moderate income areas.


3. Removal of Restrictions

 Business owners with an arrest or conviction for financial assistance fraud within the previous five years and other felonies within the last year haven’t been eligible to receive Paycheck Protection Program relief. However, the new changes to the program eliminated the second restriction. As a result, individuals with non-fraud felony convictions can now apply for a PPP loan.


4. Exclusions on Delinquency

 Businesses that are at least 20% owned by a delinquent or an individual who has defaulted on the federal debt, including student loans, in the last seven years. The new changes in the PPP excluded student loans in federal debts, allowing individuals with student loan delinquency to seek PPP relief.



 Indeed, the Paycheck protection program has helped countless business owners during the pandemic, but it is not free of issues such as waste, fraud, and abuse. The changes from the Biden administration seek to address the concerns relating to the PPP and provide relief to more business owners. Make tax preparation easy with the best professional tax software from Keystone Tax Solutions! Our ALL IN ONE Software Package is designed for small and large tax offices with multiple offices and many employees. With our program, you can avoid overpaying in hidden fees and overpriced tax software. Get a free demo today!

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