COVID-19

New PPP plan aims to level playing field for smallest businesses

Meghan McCarty Carino Feb 24, 2021
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President Biden announced changes Monday to the Paycheck Protection Program aimed at helping smaller businesses owned by women and people of color to qualify for federal loans due to the economic impact that has been caused by the COVID-19 pandemic. Alex Wong/Getty Images
COVID-19

New PPP plan aims to level playing field for smallest businesses

Meghan McCarty Carino Feb 24, 2021
Heard on:
President Biden announced changes Monday to the Paycheck Protection Program aimed at helping smaller businesses owned by women and people of color to qualify for federal loans due to the economic impact that has been caused by the COVID-19 pandemic. Alex Wong/Getty Images
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For two weeks starting today, the Paycheck Protection Program will be open only to especially small companies, firms that employ fewer than 20 people. It’s part of several tweaks the Biden administration has made to the loan program, money that becomes a grant if criteria are met.

The Paycheck Protection Program has distributed more than $600 billion to businesses during the pandemic, but those funds have disproportionately gone to larger more established companies, said Claire Kramer Mills at the New York Federal Reserve.

“They tended to have had a banking relationship, which we know was really important, and just becoming aware of PPP and getting through that process,” Mills said.

She said smaller businesses owned by women and people of color often lack that relationship with banks and have had a harder time applying, so opening the system to the smallest companies could help even the playing field.

But Paul Ong at UCLA said basing applications on company size alone won’t address all of these disparities.

“I would like to see much more fine-tuning in terms of, how do we prioritize?” Ong said.

He said there needs to be an emphasis on businesses in vulnerable neighborhoods. He found in previous rounds of PPP funding that majority-white neighborhoods in California received more money than communities of color.

COVID-19 Economy FAQs

What do I need to know about tax season this year?

Glad you asked! We have a whole separate FAQ section on that. Some quick hits: The deadline has been extended from April 15 to May 17 for individuals. Also, millions of people received unemployment benefits in 2020 — up to $10,200 of which will now be tax-free for those with an adjusted gross income of less than $150,000. And, for those who filed before the American Rescue Plan passed, simply put, you do not need to file an amended return at the moment. Find answers to the rest of your questions here.

How long will it be until the economy is back to normal?

It feels like things are getting better, more and more people getting vaccinated, more businesses opening, but we’re not entirely out of the woods. To illustrate: two recent pieces of news from the Centers for Disease Control. Item 1: The CDC is extending its tenant eviction moratorium to June 30. Item 2: The cruise industry didn’t get what it wanted — restrictions on sailing from U.S. ports will stay in place until November. Very different issues with different stakes, but both point to the fact that the CDC thinks we still have a ways to go before the pandemic is over, according to Dr. Philip Landrigan, who used to work at the CDC and now teaches at Boston College.

How are those COVID relief payments affecting consumers?

Payments started going out within days of President Joe Biden signing the American Rescue Plan, and that’s been a big shot in the arm for consumers, said John Leer at Morning Consult, which polls Americans every day. “Consumer confidence is really on a tear. They are growing more confident at a faster rate than they have following the prior two stimulus packages.” Leer said this time around the checks are bigger and they’re getting out faster. Now, rising confidence is likely to spark more consumer spending. But Lisa Rowan at Forbes Advisor said it’s not clear how much or how fast.

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