Do I Qualify For A First
To qualify for a Paycheck Protection Program loan, you must be a small business as defined by the SBA. This includes:
- Small businesses or non-profit 501 organizations with 500 or fewer employees
- Small businesses, 501 veterans organizations or tribal concerns that meet the SBA size standards
- Sole proprietors or independent contractors
Businesses in the food or hospitality industry may be eligible on a per-location basis.
In addition, the normal affiliation rules are waived for franchises or businesses receiving financial assistance from a Small Business Investment Company.
Your business must have been operational by February 15, 2020.
Loans Made To Other Entities
On April 23, the Small Business Administration released guidance stating that it is unlikely that a publicly traded business with substantial and access to capital markets would be eligible for a PPP loan. Such a business would not be able to certify in good faith that the PPP loan is necessary to support its ongoing operations because of the current economic uncertainty. While a lender does not need to require a business to demonstrate the basis in its certification, the Small Business Administration may do so. The Small Business Administration said it would not pursue action against any such business that applied for a PPP loan prior to April 23 and repays the loan proceeds by May 7, later extended to May 14 and then extended again to May 18. On April 28, the guidance was extended to businesses owned by private companies with similar situations.
On April 28, Treasury SecretarySteven Mnuchin said that the Small Business Administration would do a “full review” of each PPP loan exceeding $2 million.Treasury SecretarySteven Mnuchin warned that businesses would held be “criminally liable” if they receive a loan exceeding $2 million and do not follow the rules.
How Do I Qualify For Loan Forgiveness
Your PPP loan will be forgivablemeaning you don’t have to pay it backif you spend all the money exclusively on permitted expenses in the first 24 weeks after you receive the loan. Under the original PPP rules, the time period in which the money had to be spent was eight weeks. This was extended to 24 weeks or December 31, 2020 under the PPPFA.
If your loan was disbursed before June 5, 2020, you can use either the 24-week period or the eight-week period that was in effect when you obtained your loan. If you use the eight-week period, you can choose to have it begin on the date you received the loan funds, or the first day of the first bi-weekly pay period after you get the loan.
To be forgivable, at least 60% of the loan proceeds must be spent on payroll, which includes benefits. The original PPP rules required at least 75% of the PPP loan money be spent on payroll. This was changed to 60% under the PPPFA to give businesses more flexibility on how to use the money.
The remainder of the moneyup to 40%can be spent on the following permitted expenses:
- interest on mortgage obligations incurred before February 15, 2020
- rent under lease agreements in effect before February 15, 2020, and
- utilities, for service that began before February 15, 2020.
The money cannot be used for any other purpose or it will not be forgivable. The amount that is forgiven will be equal to the amount that you spend during the covered period on payroll and other permitted expenses.
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Some Important Points For C Corps
While your rent and utility payments can be covered by this loan and help qualify you for loan forgiveness, they are not a part of the initial calculation.
Dividends, loans to shareholder, or other owner draws should not be included in this calculation at all.
If you own a C corp and did not pay yourself a salary with payroll tax remitted, you are not considered to have a salary. If you donât have W2 employees either, you are not eligible to apply for the PPP. You should consider applying for the EIDL program.
What Was The Distribution Of Ppp Loans Among Veterans Vs Nonveterans
Like with other demographic groups, some 61% of borrowers declined to give their veteran status. But business owners that reported themselves as veterans made up a tiny fraction of the number of PPP loans and PPP funding.
Number of loans received by veteran status
Only around 135,000 out of 6.7 million PPP loans were issued to veteran-owned businesses in 2021. That’s only 2.0%.
Total PPP loans by veteran status
Again, these numbers don’t tell us much about what percentage of veteran-owned businesses received PPP funding. But it makes sense that the numbers are so low. Only around 10% of all US businesses are owned by veterans, according to an SBA survey released in 2017.
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What Is A Seasonal Employer
A seasonal employer is defined as one that:
- Does not operate for more than 7 months in any calendar year or
- During the preceding calendar year, had gross receipts for any 6 months of that year that were not more than 33.33 percent of the gross receipts of the employer for the other 6 months of that year.
How Do I Calculate My Employment Taxes Into My Ppp Application
Because I am not a lawyer or tax accountant, I will share here the SBAs guidance on the matter and encourage you to speak with your tax attorney or accountant.
Under the Act, payroll costs are calculated on a gross basis without regard to federal taxes imposed or withheld, such as the employees and employers share of Federal Insurance Contributions Act and income taxes required to be withheld from employees. As a result, payroll costs are not reduced by taxes imposed on an employee and required to be withheld by the employer, but payroll costs do not include the employers share of payroll taxes.
For example, an employee who earned $4,000 pr month in gross wages, from which $500 in federal taxes was withheld, would count as $4,000 in payroll costs. The employee would receive $3,500, and $500 would be paid to the federal government. However, the employer-side federal payroll taxes imposed on the $4,000 in wages are excluded from payroll costs under the statute.
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What Are The Required Documents For Net Profit If You Are Self
Self-employed individuals without any employees and file IRS Form 1040-C will need to calculate their payroll expenses differently. Use net profit for the business from 2019 as reported on line 31 of the Schedule C. You can use up to $100,000 of net profit, divided by 12 to get the average monthly net profit. Then multiply that number by 2.5 to get the maximum loan amount.
If you havent filed your 2019 taxes yet, that is OK. You will need to have them prepared though to submit your application.
Tracker: Paycheck Protection Program Loans
The following tracker uses the most recent data from the Small Business Administration to chart the allocation of Paycheck Protection Program funds.
In the face of the economic and social disruption caused by the coronavirus, Congress has enacted three economic relief packages. With an estimated $2 trillion price tag, the third package, the Coronavirus Aid, Relief, and Economic Security Act, is perhaps the largest and most significant federal emergency aid bill in U.S. history.
The CARES Act set aside $349 billion for the relief of small businesses, to be administered by the SBA in the form of the PPP. The SBA commenced the PPP on April 3, 2020, and closed the program on April 16, 2020, on the exhaustion of the $349 billion appropriated by Congress . Congress later provided an additional $320 billion for the PPP in H.R.266, the Paycheck Protection Program and Health Care Enhancement Act . This brought the total funds available to the SBA and the PPP to $669 billion. The PPP program was due to expire at midnight on June 30 with funds remaining, but just hours for the expiration of the program Congress authorized an extension through August 8. This date passed without a second extension to the program.
On May 5 the SBA announced that all funds for Round Three, and the PPP as a whole, had effectively been exhausted.
On May 5 the SBA announced that all funds for Round Three, and the PPP as a whole, had effectively been exhausted.
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What Is The Paycheck Protection Program
The Paycheck Protection Program was created on March 27, 2020, as part of the Coronavirus Aid, Relief, and Economic Security Act, also known as CARES, to help small businesses keep employees on the payroll. The program’s primary tool is forgivable loans intended to make paying employees easier during the economic fallout of the coronavirus pandemic.
The SBA guarantees PPP loans, while banks and other financial institutions underwrite and issue them.
The first PPP round opened on April 3 but the $349 billion in initial funding was depleted in weeks. An additional $310 billion in funding was signed into law in late April, and applications closed on Aug. 8.
About The Ppp Loan Program
The Coronavirus Aid, Relief, and Economic Security Act contains several programs designed to help small businesses. The most popular of these is the PPP, which the SBA classifies as a 7 loan. Its aim is to help small businesses impacted by the crisis keep workers on their payroll. Those who have already had layoffs have until December 31 to rehire workers and restore any salaries that have been cut.
The main appeal of PPP loans is that all or part of each loan can be forgiven if certain head count and payroll criteria are met. Small business owners may receive only one PPP loan, though they can also apply for an Economic Injury Disaster loan as long as the two loans cover different costs.
The demand for PPP loans was so high that the government had to pass a new bill authorizing an additional $310 billion for loans. The SBA has begun to post every night how much money has been approved for loans: there is less than $141 billion left as of the morning of July 20.
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The Best Personal Loan Terms
When youre looking to take out a personal loan, you should be aware of the term lengths and interest rates. The longer your term, the lower your interest rate. While this may not seem like the most important factor when considering a loan, its an important one to keep in mind.
When it comes to personal loans, there are many options available to you. These include: personal loans, business loans, car loans, and home equity loans. Which loan is right for you? What are the best terms? Read on to find out.
Is A Ppp Loan Right For You
Initially, most business owners probably think that of course theyll apply for a PPP loan. Its free money if you qualify for forgiveness, after all. But after more consideration, some decided to pass.
One reason was the fact that the loan provided funds to cover payroll for only eight weeks. So business owners who thought it would take longer than that for their revenues to return did not see the point in borrowing the money to make payroll for eight weeks only then to let people go. This was especially the case if most of their workers are minimum wage or close to it, since the CARES Act that created the PPP also authorized a $600-per-week boost to unemployment benefits. So minimum wage workers and other low-wage workers would get more money unemployed than employed.
Also, the lack of clarity, especially when it comes to forgiveness, was giving many businesspeople pause. The legislation was written so quickly and the program launched so hastily that the guidelines are riddled with holes. The Treasury and SBA have been issuing new guidance to address problems as they arose and even offered a safe harbor until May 18 for any borrowers with second thoughts to return their loans penalty-free. Still, business owners remained wary.
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Other Changes In Sba Interim Final Rule
The SBAs IFR makes a few other changes to PPP loans.
Next, they changed eligibility rules to allow more business owners to qualify. This change enables entrepreneurs with previous non-fraud felony conditions and those who are delinquent or in default on federal student loan payments to qualify for PPP loan financing.
Hopefully, these changes will help more underserved small business owners get the financing they need to endure this pandemic.
Who Qualifies For A Ppp Loan
Small business with 500 or fewer employees may be eligible. Small businesses, S corporations, C corporations, LLCs, private nonprofits, tribal groups, veteran groups and faith-based organizations can all qualify. Whats more, self-employed people who file an IRS Schedule C with their Form 1040, such as sole proprietors and independent contractors, are also eligible, though they must have been in operation on February 15, 2020, and have the U.S. as their principal place of residence.
Restaurants and hospitality businesses also make the cut if they have 500 or fewer employees per location. Details on the size standards and exceptions are on the SBA website.
Applicants more than 60 days delinquent on child support obligations, sex businesses, lobbyists, gambling establishments and businesses involved in illegal activities dont qualify. Also, hedge funds, private equity firms and companies involved in bankruptcy proceedings are ineligible. Additionally, the Treasury has ruled that public companies with significant market value are likely ineligible. This is based on the fact that most publicly traded companies have access to sufficient liquidity, while to apply for a PPP loan, you must certify that the loan is necessary to support ongoing operations. In other words, the PPP should be your only way to access needed financing.
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Payroll Documents Required For A Paycheck Protection Loan Application
The CARES Act states that you must submit the following documents to your lender with an application requesting forgiveness for your PPP loan, so you should make sure you are thinking in terms of documenting how you spend the loan proceeds.
- Payroll tax filings reported to the Internal Revenue Service
- State income, payroll, and unemployment tax filings
- Documentation, including cancelled checks, payment receipts, transcripts of accounts, or other documents verifying payments on covered mortgage obligations, payments of covered lease obligations, and covered utility payments
- Any other documentation the SBA Administrator determines is necessary.
The SBA guidance also states that, No eligible recipient shall receive forgiveness under this section without submitting to the lender that is servicing the covered loan the documentation required
Paycheck Protection Program And Health Care Enhancement Act
On April 21 and 23, respectively, the Senate and House passed the Paycheck Protection Program and Health Care Enhancement Act to add $320 billion of funding to the PPP. President Trump signed the bill into law on April 24, 2020, which allowed the Small Business Administration to accept applications again on April 27.
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The Paycheck Protection Program Has Doled Out Billions In Forgivable Pandemic Relief Loans To Businesses Use This Database To See Where The Money Went
By Sergio Hernandez, CNN Published July 20, 2020
The Paycheck Protection Program , which has approved $521 billion to help small businesses keep workers on their payrolls through low-interest, forgivable loans, has been a central pillar of the federal governments economic response to the Covid-19 pandemic.
In July, the Small Business Administration , which operates the program and backs the loans, released detailed data on almost 650,000 active loans each worth $150,000 or more. Use this database to search the data, which represents almost $380 billion nearly 75% of the money awarded so far.
Which Businesses Are Eligible
Starting on Wednesday, Feb. 24 the Paycheck Protection Program will be restricted solely to businesses that have fewer than 20 employees. The two-week restriction is intended to force PPP lenders to re-focus their efforts on reaching the smallest of small businesses.
The 14-day exclusive application period will allow lenders to focus on serving these smallest businesses, stated an SBA fact-sheet that was shared with reporters.
After the 14-day period the earlier PPP rules will apply: those eligible to receive PPP funding for the first time include businesses that meet established SBA size standards, independent contractors and 501 nonprofits. The SBA also made some new business categories eligible which had previously been shut out, including 501 organizations such as local chambers of commerce, housing cooperatives and direct marketing organizations.
Business owners with past felony convictions and those who have defaulted on student loan payments are no longer excluded from the program, thanks to bipartisan legislation known as the PPP Second Chance Act. Those with past fraud convictions are still excluded.
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The Treasury Department Is Making A Number Of Changes Designed To Send More Funding Towards The Smallest Of Small Businesses
The Biden is implementing a series of changes to the federal Paycheck Protection Program small business loans designed to ensure more of the funding goes to the smallest of small businesses.
The new changes play into the a $284 billion tranche of PPP funding currently being loaned out, and build on a phased roll-out that started about a week before Biden took office.
Companies with more than 20 employees will be shut out of the program until March 10 in order to give the smallest firms an exclusive two-week window. Other changes announced in late February mean that some independent contractors and self-employed individuals could get larger payouts.
While the Paycheck Protection Program has delivered urgent relief to many businesses across the country, the initial round of PPP last year left too many minority-owned and mom-and-pop businesses out, while larger, well-connected businesses got funds quickly, a senior administration official told reporters in a Sunday-evening call with news media.
Below are answers to some key questions facing business owners and those they employ, including changes to the law that came with the most recent bipartisan relief bill, as well as rule changes announced more recently by the Biden administration.