With just over $50 billion still available in the Paycheck Protection Program, Senate lawmakers on Tuesday introduced a new bill that would make good on a Biden administration promise to get more money into the hands of solopreneurs.
The bill, dubbed the PPP Flexibility for Farmers, Ranchers, and the Self-Employed Act, would allow sole proprietors, independent contractors, and the self-employed to retroactively apply for more money through the forgivable loan program. This proposed revision to the PPP follows the Biden administration's February 22nd request that the Small Business Administration change the formula these borrowers use to calculate their PPP loans. Rather than using net income, which removes taxes and other expenses, these borrowers may now use gross income, which allows them to book higher loan amounts.
But the SBA concluded in a March 3 notice that those who applied for a loan prior to the change would not be eligible for retroactivity. This bill would counter that.
According to a summary of the proposed law, retroactivity would go back to December 27, 2020, the date of enactment of the Economic Aid Act. SBA administrator Isabel Guzman would be required to create a process to allow eligible applicants to request a recalculation of the amount of a covered loan and receive a payment that is equal to the difference between the amount of the covered loan originally received by the eligible applicant and the amount of the covered loan.
The summary also notes that borrowers would be eligible for retroactivity only on one loan and the $2 million limit on second-draw loans would apply. Guzman, according to the bill, could decide to make supplemental payments as a new loan if it helps expedite implementation of the program.
The bill would also allow some farmers and ranchers to use gross income rather than net income when applying for PPP. And it gives more flexibility to those attempting to calculate their revenue losses. Rather than letting them just look year over year--that is 2020 over 2019--or quarter over quarter to show a revenue loss of at least 25 percent, borrowers could use any contiguous 90-day period to determine eligibility for second-draw loans.
"The Biden administration has taken steps to make PPP more useful to farmers, ranchers, and sole proprietors, so making the changes retroactive is a matter of basic fairness," Democratic Senator Ben Cardin of Maryland, who introduced the bill, said in a statement. "Congress must pass this bill as quickly as possible so eligible small businesses have time to secure the aid they need before PPP closes on May 31."
After relaunching on January 11, the PPP has guaranteed more than 4.73 million loans for more than $240 billion.
While it may be the case that Congress passes this bill before the PPP's May 31 end date, that doesn't mean program funds will still be available. During a March 24 Senate hearing on the efficacy of Covid-19 relief initiatives, Patrick Kelley in the Small Business Administration's Office of Capital Access noted that the PPP program could exhaust its funding this month. At the time, there was just $79 billion left. As of April 20, there is just $51 billion left, out of a total of $291 billion.