As it stands, PPP loans are issued based on loss of revenue due to the pandemic, and can only be used for payroll, rent and utilities. It is still unclear if these parameters could extend to other uses in the future, which is a growing concern among small businesses who need to address other cost areas of their business like maintenance, operations, or anything that comes with operating their business during the pandemic (e-commerce needs, delivery capabilities, technology updates, etc.).

Small businesses should note, however, that once an owner opts into a PPP loan, their business might not qualify for traditional financing until the PPP is forgiven and they show profit or cash flow to support the financing.

As with the February 24th announcement from the administration, the Biden administration did mention a revision of the loan calculation formula to better assist sole proprietors, contractors, and self-employed small business owners—though, as with many areas of new PPP guidelines, the specifics are still unclear, especially when it comes to whether the new loan calculation formula will affect future funding rounds (if any) of PPP.

How to improve PPP

There is still ambiguity around whether SMBs could be saddled with debt as a result of PPP loans, so more transparency from the SBA is definitely needed in order for small businesses to make better informed decisions on whether they should sign up.

SMBs, the general public, and even the banks issuing the loans have called for more clarity. It's worth noting that the latest round of PPP in early February and the new notice on February 24 are a step in the right direction.

One big difference the SBA can make in the short term is to have more flexible terms for the loans (which they're making progress towards with the new lower rates).

The latest round of funding elongated the cycle time for the PPP loans, which has also caused a great deal of frustration for small business owners. The SBA and Biden Administration could address this in a future amendment to the program, similar to some of the other measures that were lifted, such as the student loan balances and citizenship requirements. These would help provide some relief for owners who are already struggling to make ends meet despite two rounds of support.

Overall, the first rounds came with their headaches—and the current terms are an improvement!—but there is still more progress to be made.

Transparency is needed to help SMBs make proper, informed decisions when enrolling in the PPP program, but recent headway in terms of flexibility suggests that more relief could be on the horizon for small businesses.

These businesses have all been hit hard, but with these options and the right information at their disposal, they might be able to weather the storm and come out stronger on the other side.

Bryan O'Connell is the CEO of Huckleberry, a platform with a mission to rebuild business insurance from the ground up by providing small business owners with the capability to manage all of their insurance needs through its transparent, easy-to-use interface.