PPP bill would make loan recalculations retroactive for farmers, sole proprietors

Dive Brief:

A bipartisan group of senators introduced a bill Tuesday that would let farmers, ranchers and sole proprietors retroactively use gross income rather than net income to calculate the amount they could receive in Paycheck Protection Program (PPP) loans.
The Biden administration on Feb. 22 announced it would let independent contractors, sole proprietors and the self-employed use gross income instead of payroll to calculate loan amounts. The Small Business Administration (SBA), however, didn’t institute the changes until early March and only applied them from that date forward, saying it lacked the authority to make changes retroactive.
Tuesday’s bill would let most independent contractors who received PPP funds between Jan. 11 and March 3 apply the gross income formula retroactive to Dec. 27, the date Congress passed the stimulus bill that revived PPP. Farm-partnership borrowers, under the bill, could apply the formula retroactive to March 27, 2020, the date Congress passed the CARES Act that created PPP.

Dive Insight:

Despite the potential boost the bill would give borrowers, it would not extend PPP’s end date. As of Saturday, borrowers had claimed about $240 billion of the $284 billion made available when the program relaunched in January, according to SBA figures. The PPP application deadline is May 31, and the SBA has until June 30 to close pending PPP applications.

Tuesday’s bill also adjusts a time frame borrowers can use to show loss of revenue. Second-draw applicants must show a downturn of 25% or more in revenue during any financial quarter of 2020, when it’s compared with 2019. This latest legislation would move that window to any 90 consecutive days.

"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," Sen. Ben Cardin, D-MD, said in a press release Tuesday. He and six other senators introduced the bill.

"We have already acknowledged the need for increased flexibility and parity since some businesses who applied for the Paycheck Protection Program early missed out on additional assistance," said Sen. James Lankford, R-OK, another of the bill’s signees. "This bipartisan package ensures self-employed individuals, farmers, and ranchers can take advantage of PPP changes and receive access to the same level of economic assistance. I look forward to the bill quickly passing the Senate."