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Biden is facing a reaction to the overhaul of a small business

“These businesses have been neglected for almost a year,” House Small Business Chairman Nydia Velázquez (DN.Y.) told POLITICO. “I am committed to working with the Biden administration to spread these benefits to as many of these sole traders as possible, not just those who apply.”

According to House’s Small Business Committee, more than 2.6 million sole traders, independent contractors and the self-employed have already been approved for PPP loans.

The reaction is the latest in a series of controversies over the management of the SBA program, which since its launch in April last year has distributed more than $ 662 billion in loans, which can be simplified if companies keep their salaries. The SBA, a small federal agency that manages PPPs along with the Treasury, has faced criticism for non-transparent decision-making and ever-changing rules governing an unprecedented economic lifeline.


7;m in a black hole because it looks like they’ll definitely forget about people who have already applied,” said Jonathan Kolbe, a New Jersey-based freelance photographer who received two PPP loans and won’t be able to increase them. the new rules. “I’m disappointed with the SBA not considering it to help people who have already played by the rules, signed the applications and received approval.”

Concerns about the treatment of sole traders, independent contractors and self-employed companies – small employers, including home cleaning and repair services – have intensified PPPs since the beginning of the program. While other companies were able to calculate their eligibility for PPP loans based on payroll costs, smaller companies were forced to apply for loans based on their net profit, which deducted things like rent and utilities.

A survey of members of the National Self-Employed Association in December and January found that 68 percent believed the federal government did not provide adequate financial support to small businesses through PPPs. A separate study published last month by the Small Business Majority Advocacy Group found that more than one in three companies applying for loans did not receive the full amount they requested, including almost all of the self-employed Black entrepreneurs surveyed.

Last week, the Biden administration announced it would review the rules for sole traders and the self-employed after finding that these business owners were “structurally excluded” and changed in the short term, even though they made up the majority of all businesses. . Under the new rules released by the SBA on Wednesday, companies will be able to calculate the amounts of their loans based on a broader measure – gross income, which would facilitate their ranking.

Although this seems to be a broad policy benefit for the first time, the SBA will limit its potential impact by not allowing companies to modify their existing PPP loans if they have already been approved for the aid. This is a departure from the recent precedent. The SBA allowed farmers and ranchers to increase earlier PPP loans after Congress passed a law in December that allowed them to qualify for more funding.

The SBA claims that it lacks the power to take retroactive rules to allow it to increase earlier PPP loans. SBA spokesman Matthew Coleman said Congress in December gave him the power to revise the rules for farmers and ranchers.

Although the small business involved has no army of lobbyists, their defenders are beginning to retaliate.

“Those people who are diligent should not be punished,” said Keith Hall, president and CEO of the National Self-Employed Association.

Some on Capitol Hill believe the SBA has the power to adjust loans. Legislators plan to delve into the reasons behind the decision and whether legislation is needed to remove it.

Senate Small Business President Ben Cardin (D-Md.), Who plans to hold a PPP oversight hearing this month, said “it’s a matter of fairness.”

“I am very interested in looking for ways in which we can provide the same benefits for those who have already applied,” he said. “I need to understand a little more fully the administrative challenges faced by the SBA and why they could not recommend this administratively.”

If the SBA adheres to policy and Congress needs to intervene, borrowers face a tight schedule. The PPP loan is due to expire on March 31. So far, neither the White House nor key Democrats are working hard to extend it.

Dennis Aman, chief executive of Peoples Bank in Mississippi, said “it seems that the small business that needs the most help has been punished.”

“I am so disappointed with the SBA if they stick to this expected policy,” Aman said. “I don’t understand why the SBA wouldn’t allow lenders to help those little ones in the small business. It just doesn’t make sense.”

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