Biden is making it easier for owners to access small business relief with student loans and previous criminal convictions

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President Biden announced Monday that he would facilitate access to federal financial aid programs for certain small business owners that were being enacted in response to the COVID-19 pandemic and recession.

Congress created the Paycheck Protection Program (PPP) through the CARES Act, which went into effect last April. The program provides small business owners with critical financial relief in the form of forgivable credit to help businesses stay afloat and avoid permanent shutdowns during temporary lockdowns and economic downturns.

But the original approval requirements for PPP were sometimes opaque and restrictive. The rules suggested that small business owners convicted of serious criminal offenses in the past or those in disrepair with federal student loan debt could be excluded from the program. Meanwhile, lawmakers and activists criticized the administration of the PPP program, from which many large, publicly traded companies benefited while smaller partnerships and sole proprietorships initially did not have access to funding.

President Biden announced changes Monday to address these issues. The new regulation increases the scope of PPP funding for sole proprietorships and provides for a two-week funding freeze for larger companies with 20 or more employees so that smaller companies already have sufficient opportunity to apply for funding.

The new rules also change the eligibility criteria for PPP loans for those with previous criminal convictions or defaulted federal student loans. The changes will allow business owners with previous convictions unrelated to fraud to apply for PPP funding. Additionally, owners who have defaulted or have defaulted on federal student loan debt are no longer excluded from the program.

“These changes will bring much-needed, long-overdue help to small businesses that really need help to stay open, keep jobs and make ends meet,” Biden said Monday.

Last month, President Biden issued an executive order extending the moratorium on payments, interest and recovery of federal student loans until September 30, 2021. This relief was also originally provided by the CARES Act. But even though the government halted collection efforts on most of the federal defaulted student loans, business owners with federal defaulted student loans were unable to obtain PPP loans to keep their businesses alive.

The new changes are due to take effect on Wednesday.

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