February 22, 2021

Cardin Lauds Biden-Harris Administration Actions to Increase Relief to Underserved and Underbanked Small Businesses

WASHINGTON – U.S. Senate Committee on Small Business & Entrepreneurship Chair Ben Cardin (D-Md.) today issued a statement lauding the Biden-Harris Administration for making changes to the Paycheck Protection Program (PPP) to further target relief to the smallest businesses, including many Black-and Latino-owned small businesses, as well as small businesses in low-income communities.  

“The changes announced by the Biden-Harris Administration today will make PPP a much more equitable program and provide relief to the millions of Black- and Latino-owned small businesses that were left out of, or underfunded, during previous rounds of relief,” Cardin said. “I have pushed for many provisions to prioritize underserved and underbanked businesses in all the covid-19 relief, and I applaud the Administration for taking swift action to build on our work and ensure that our most vulnerable small businesses get the help they need during the pandemic.”

The changes announced by the Biden-Harris Administration will:

  • Implement a 14-day period, starting Wednesday, February 24, during which only businesses with fewer than 20 employees can apply for relief through the Program. 98 percent of small businesses have fewer than 20 employees. They are Main Street businesses that anchor our neighborhoods and help families build wealth. And 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 14-day exclusive application period will allow lenders to focus on serving these smallest businesses. The Biden-Harris administration will also make a sustained effort to work with lenders and small business owners to ensure small businesses take maximum advantage of this two-week window.

  • Help sole proprietors, independent contractors, and self-employed individuals receive more financial support. These types of businesses, which include home repair contractors, beauticians, and small independent retailers, make up a significant majority of all businesses. Of these businesses, those without employees are 70 percent owned by women and people of color. Yet many are structurally excluded from the PPP or were approved for as little as $1 because of how PPP loans are calculated. To address this problem, the Biden-Harris administration will revise the loan calculation formula for these applicants so that it offers more relief, and establish a $1 billion set aside for businesses in this category without employees located in low- and moderate-income (LMI) areas.

  • Consistent with a bipartisan bill, eliminate an exclusionary restriction that prevents small business owners with prior non-fraud felony convictions from obtaining relief through the Paycheck Protection Program.  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. To expand access to PPP, the Biden-Harris administration will adopt bipartisan reforms included in the PPP Second Chance Act introduced by Chair Cardin, and Senators Rob Portman (R-Ohio), Cory Booker (D-N.J.), and James Lankford (R-Okla.), which would eliminate the second restriction (the one-year look-back) unless the applicant or owner is incarcerated at the time of the application.

  • Eliminate an exclusionary restriction that prevents small business owners who are delinquent on their federal student loans from obtaining relief through the Paycheck Protection Program. Currently, the PPP is not available to any business with at least 20 percent ownership by an individual who is currently delinquent or has defaulted within the last seven years on a federal debt, including a student loan. Millions of Americans are delinquent on student loans, including a disproportionate number of Black borrowers. Working with the Departments of the Treasury and Education, the SBA will remove the student loan delinquency restriction to broaden access to the PPP.

  • Ensure access for non-citizen small business owners who are lawful U.S. residents by clarifying that they may use Individual Taxpayer Identification Numbers (ITINs) to apply for relief. The PPP statute is clear that all lawful U.S. residents may access the program, but a lack of guidance from the SBA has created inconsistency in access for ITIN holders like Green Card holders or those here on a visa. The SBA will address this unfair inconsistency by issuing clear guidance in the coming days that otherwise eligible applicants cannot be denied access to the PPP because they use ITINs to pay their taxes.

Cardin has been a lead negotiator of each of the COVID-19 relief bills that have been passed by Congress during the pandemic—securing more than $1 trillion in aid for small businesses—and he has led efforts to ensure that funds are distributed equitably. Cardin and Senator Jeanne Shaheen (D-N.H.) drafted a provision in the CARES Act that required the Small Business Administration (SBA) to issue guidance to financial institutions participating in the Paycheck Protection Program (PPP) to prioritize loans for underserved small businesses, which has led to a movement by the Page 30 Coalition for more equity in SBA’s COVID-19 response. In April of last year, Cardin secured a $60 billion set-aside in PPP for smaller lending institutions, such as credit unions, community banks, Community Development Financial Institutions, and Minority Depository Institutions that can better reach Black-owned businesses. In the $900 billion bipartisan relief bill that passed in December, Cardin also secured an additional $60 billion in set-asides that included $35 billion for borrowers who were unable to apply for an initial PPP loan, of which $15 billion is for smaller borrowers with up to 10 employees or loans of up to $250,000 in low-income areas; and $25 billion for second PPP loans for the same small borrower category.