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How To Apply For Ppp Loans

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Ppp Extension Act Of 2021

PPP loans: How they work, who can apply, and when they become grants

On March 11, 2021, the bill, H.R. 1799 PPP Extension Act of 2021, was introduced in House of Representatives during the 117th Congress. The bill extends the covered period of the Paycheck Protection Program from March 31, 2021, to June 30, 2021, by amending the Small Business Act and CARES Act. It passed the House on March 16, 2021, in a bipartisan vote . It passed the Senate on March 25, 2021, in an also bipartisan vote . The following day on March 26, it was signed into law by President Joe Biden.

What Are Ppp Loans

Introduced in March 2020, The PPP emergency loan program was formed as one part of the 2 trillion dollar CARES Act. The act authorised the distribution of more than 600 billion dollars in forgivable loans to small businesses, to help them navigate the pandemic and help ease their losses.

The loans were disbursed over two rounds with most business owners getting up to 2.5 times their monthly pay roll expenses, based on their 2019 and 2020 tax returns.

While the program officially ended in May 2021, small business owners might still be eligible for loan forgiveness.

Enter Or Confirm Additional Owner Info

Next, add in or confirm all necessary information for additional owners . You must add information for any individual with at least a 20% share in the business.

All fields on the Additional Owner page must be completed, including date of birth.

Note: You will need a color copy of each owners Drivers Licenseboth front and back. You will be asked to upload the copies in the Documents section .

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What Are The Benefits Of Paycheck Protection Program Loans

PPP loans are designed to assist small businesses in keeping their payrolls up to date and continuing to make important payroll-related payments such as rent and utilities. We can use the loan for the following purposes in its entirety:

  • Payroll expenses:
  • Group vision, dental, disability, or life insurance
  • Payment of state or local taxes assessed on the compensation of employees
  • Healthcare costs associated with the maintenance of group healthcare coverage during sick, medical, or family leave, as well as insurance premiums
  • Interest payments on a mortgage
  • Any other debt commitments incurred before February 15, 2020 will be subject to interest.
  • Refinancing an SBA EIDL acquired between January 31st and April 3rd, 2020
  • Expenses that support business operations, product or service delivery, such as business software or cloud computing services.
  • business operations
  • the processing, payment or tracking or payroll expenses, human resources, sales, and billing functions
  • accounting or tracking of supplies, inventory, records, or expenses
  • Covered supplier costs
  • Does The Ppp Work

    How to Apply for Your First PPP Loan in 2021

    The PPP has been successful and prevented a much deeper economic recession in the United States. Thus far, the United States has doled out more than $500 billion in loans via the PPP.

    There is no question it has saved jobs.

    Despite historic unemployment of nearly 15% in April, small businesses are rehiring their employees. The unemployment rate is now 11% in June and the PPP is credited with saving 16 million jobs in total.

    The bottom line is that the PPP is an unquestioned success. For this reason, Congress recently extended the program out to .

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    How Does Ppp Loan Forgiveness Work

    The new PPP authorization creates a simplified forgiveness process for borrowers who received loans less than $150,000.

    PPP funds used on payroll costs, rent, utilities and mortgage interest in the 8 to 24 weeks after receiving the loan are forgivable. This means you wont be required to repay that portion of the loan. But you must have spent at least 60% on payroll costs and no more than 40% on nonpayroll costs in order to receive full forgiveness.

    Loan Forgiveness Under The Paycheck Protection Program

    A major element of the Paycheck Protection Program is its loan forgiveness. To be eligible for loan forgiveness, borrowers must meet the following requirements:

    • Maintain staff: Loan forgiveness is reduced for companies that decrease the number of full-time employees on their staff.
    • Allocate funding to payroll: Paycheck Protection Program loans are applicable to payroll costs, mortgage interest, rent and utilities payments. Businesses will owe money on any other expenses the funding is used for in the first eight weeks after receiving the loan. Moreover, the SBA anticipates that no more than 25% of the forgiven amount will be for nonpayroll expenses.
    • Maintain wages and salaries: Borrowers who decrease salaries or wages by more than 25% for any employee making less than $100,000 per year will also have their loan forgiveness reduced.
    • Rehire furloughed or laid-off staff: Borrowers must restore their full-time employment and salary levels by June 30, 2020, to be eligible for full loan forgiveness.

    According to Pippett, much of any Paycheck Protection Program loan is likely to be forgiven, but even for borrowers who owe money when the loan comes due, the terms and rate are extremely favorable.

    Taussig said most of the work to certify that funds were used properly and the loan is eligible for forgiveness falls on the lender but that small businesses can work to improve the process and better position themselves for loan forgiveness after the eight-week period.

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    Small Business Paycheck Protection Program

    The Paycheck Protection Program established by the CARES Act, is implemented by the Small Business Administration with support from the Department of the Treasury. This program provides small businesses with funds to pay up to 8 weeks of payroll costs including benefits. Funds can also be used to pay interest on mortgages, rent, and utilities.

    The Paycheck Protection Program prioritizes millions of Americans employed by small businesses by authorizing up to $659 billion toward job retention and certain other expenses.

    Small businesses and eligible nonprofit organizations, Veterans organizations, and Tribal businesses described in the Small Business Act, as well as individuals who are self-employed or are independent contractors, are eligible if they also meet program size standards.

    Previous Versions of Applications

    How To Get Your Ppp Loan Forgiven And Apply For A Second One

    PPP Round 2: How to Apply for a New PPP Loan (1st and 2nd Draw)

    by Mike Price |Updated Aug. 5, 2022 – First published on May 18, 2022

    Image source: Getty Images

    No question, 2020 was hell on small businesses. Retail businesses in many areas couldnt stay open. Employees couldnt work if they became afflicted with COVID-19 or had increased risk from the virus. Banks were just as scared as everyone else, and finding a small business loan became impossible.

    Midway through the year, the Paycheck Protection Program was introduced to offer relief to small businesses through SBA small business loans. My company took advantage of the program and kept high-risk employees on the payroll and kept their insurance going, even when they couldnt come into work.

    We applied for and received loan forgiveness on the loan as soon as we were able, and just this week, we got an email from our banker offering us the chance to participate in the second round of PPP loans that’s happening now.

    Lets take a look at how you can get your PPP loan forgiven and if youll qualify for the second round.

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    What Youll Need To Fill Out The Ppp Application

    The required documents will change from lender to lender, but generally, here is what you should gather:

  • Copies of all business owner photo IDs: Get this for anyone who owns at least 20 percent of the business
  • Payroll reports
  • Accounting information: Dont have access to your payroll reports? The next best option is to use your accounting software to compile the payroll cost information.
  • Tax forms: While each bank or lender will have its own process, tax documents likely to be requested are:
  • IRS Form 1040, Schedule C
  • Note: If youre a Gusto customer, to download your Payroll Protection Program report. Youll find these in your Documents tab.

    Loans Made To Politicians And Their Families

    Some PPP loans were received by businesses owned or run by members of Congress or their spouses. On June 16, Politico reported that this included Reps. Susie Lee ” rel=”nofollow”> DâNV), Debbie Mucarsel-Powell ” rel=”nofollow”> DâFL), Roger Williams ” rel=”nofollow”> RâTX), and Vicky Hartzler ” rel=”nofollow”> RâMO). Three weeks prior, Dean Phillips ” rel=”nofollow”> DâMN) had introduced legislation to require public release of the name of many of the recipients of PPP loans, but enough Republicans voted against it that the bill did not pass. Lee and Muarsel-Powell had voted in favor of public disclosures while Williams and Hartzler had voted against public disclosures. Ordinarily, an application for a Small Business Administration by a business owned or run by a member of Congress or their immediate family must be reviewed by the Standards of Conduct Commissions before the loan may be approved, but the Small Business Administration had waived that requirement for all PPP loans on April 13.

    Rep. Ayanna Pressley reported receiving PPP loans in her 2020 Financial Disclosure Report.

    The parents of White House Press Secretary Kayleigh McEnany received $1â2 million for their business, McEnany Roofing, which has 141 employees. The press secretary told Fox News in April 2020 that most loans had gone to “companies with 10 or fewer employees. That is what this program is designed to do, that is who it is helping.â

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    How To Apply For Loan Forgiveness

    Small business owners can apply for PPP loan forgiveness once all loan proceeds for which the borrower is requesting forgiveness have been used.

    These borrowers can register for forgiveness any time up to the maturity date of the loan.

    However, if a borrower does not apply for the loan forgiveness within 10 months after the last day of the covered period, then the PPP loan payment cannot be deferred, and the borrowers will have to start making loan payments to their PPP lender.

    Second Draw Ppp Loans

    How to Apply for Your Second PPP Loan

    If the following statements apply to your business, you are eligible to apply for your second PPP loan in 2021.

    • You have used up your first PPP loan
    • Your business was operational before February 15, 2020
    • Your business is still open and operational
    • You have no more than 300 employees
    • If your business has multiple locations, you have no more than 300 employees per location
    • You can show a 25% or greater reduction in gross revenue

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    More Than 5 Million Businesses Have Received Covid Relief Funds It’s Important To Keep Loan Forgiveness In Mind From The Moment You Receive Your Funds To Avoid Unforeseen Costs

    The COVID-19 pandemic left millions of businesses struggling to stay afloat. Between lockdowns, quarantine, and uncertainty over the future, small business owners found themselves stuck between a rock and a hard place. Unfortunately, some were forced to make the difficult decision to close down operations, and many of those had to do so permanently. Luckily for other businesses, aid came in the form of disaster relief funds.

    Now that over 5 million businesses have received COVID relief funds, another important question arises for small business owners: How can they ensure the loans are forgivable? Its important to keep loan forgiveness in mind from the moment you receive your funds. Otherwise, you could find yourself blindsided later if you dont meet the eligibility requirements for forgiveness.

    Here are the key takeaways for small business owners:

    • Economic Injury Disaster Loan and the Paycheck Protection Program Loan loans are eligible for some degree of loan forgiveness.

    • The EIDL advance grant is forgivable, up to $10,000.

    • EIDL advance grant forgiveness is automatic.

    • PPP loans up to $10 million can be forgiven.

    • PPP loan forgiveness requires submission of an application to the lending institution.

    Consolidated Appropriations Act 2021

    On December 21, 2020, the House and the Senate passed the Consolidated Appropriations Act, 2021, which includes $284 billion in forgivable loans to small businesses via the Paycheck Protection Program.

    The Act restarted the period to apply for PPP loans, added $284.5 billion in funding for PPP loans, and it allowed certain entities to apply for a second draw of a PPP loan. The Act also opened eligibility to certain 501nonprofit organizations.

    The Act stated that entities that received a PPP loan of less than $150,000, rather than $50,000, would be eligible to use a simplified one-page loan forgiveness application.

    The Act expanded the definition of allowable payroll costs to employer-sponsored group life insurance benefits, group disability insurance benefits, group vision insurance benefits, and group dental insurance benefits.

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    Report From Sba Inspector General

    Hannibal Ware, the Inspector General of the Small Business Administration, said that the Small Business Administration had set stricter rules than were stated in the law establishing the program, which is causing an “unintended burden” on businesses.

    The Small Business Administration requires 75% of a PPP loan be used for payroll costs, which is a rule not found in the law. The Small Business Administration stated all PPP loans would have a maturity date of two years, while the law allowed for up to ten years. The Small Business Administration has also not complied with all of the requirements stated in the law. The law required the Small Business Administration to issue guidance to lenders about the loan deferment process, but it did not do so. The law required lenders to prioritize businesses in underserved and rural areas, but the Small Business Administration did not issue any such guidance to lenders. The law required the Small Business Administration to register each PPP loan using the Taxpayer Identification Number of each business within 15 days after each loan was made, but it did not do so.

    A group of software and information technology companies has sued the Small Business Administration and the Department of the Treasury, alleging that the two agencies had improperly added restrictions to the program that were not present in the original law.

    How To Fill Out The First

    Paycheck Protection Program (PPP) Loan Application Tips for 2021 | Chase

    An interim final rule enables those who fill out Form 1040, Schedule C, to elect to make the loan calculation using gross income rather than net profit. Gross income will be found line 7 of the 1040, Schedule C form, while net profit is found on line 31. Using gross income will make your loan maximum amount larger.

    If you choose to use gross income to calculate your loan amount you will need to use this PPP application form. If you choose to make your calculation using net profit, use the instructions above to fill out your application form. However, if you want to make your loan calculation using gross income, keep reading.

    First, use this version of the PPP first-draw application.

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    How Can You Apply For Ppp If Youre Self

    You can apply for PPP via any lender participating in PPP whether or not they are your primary bank. Online applications make it easy and accessible, in addition to limiting exposure with an in-person application. To apply for a PPP loan online, youll need to calculate your payroll costs and gather the required documentation to complete the application successfully.

    For full instructions for how to apply online, consult our Step-by-Step Guide to Applying for a PPP loan.

    Changes To The Ppp Program Announced By The Biden Administration

    On Feb. 22, 2021, the White House announced five changes to the Paycheck Protection Program. One change had a set term of two weeks. The other four would be effective until at least the end of March 2021.

    These changes were designed to make PPP funds available to very small businesses and others that had been inadequately helped by the program, according to the Biden administration.

    • Beginning on Wed., Feb. 24, 2021 through Tue. March 9, 2021, businesses with fewer than 20 employees were permitted to apply for PPP funding.
    • The formula used to calculate PPP loans was revised to provide more funding for sole proprietors, independent contractors, and self-employed individuals. An additional $1 billion was allocated for these individuals in low-and moderate-income areas.
    • Eligibility for PPP funding was extended to small business owners with non-fraud related felonies as long as the applicant was not incarcerated at the time of the application.
    • Business owners with delinquent federal student loans were eligible for a PPP loan.
    • Non-citizens who were lawful U.S. residents were also eligible and allowed to use their Individual Taxpayer Identification Numbers to apply.

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    Can My Business Apply For The Ppp

    There are some eligibility requirements to apply for the PPP. This program was designed specifically for small businesses that were directly affected by the coronavirus pandemic.

    For starters, your company needs to meet the size criteria defined by the U.S. Small Business Administration . Depending on what industry you are in, the SBA is going to verify that your company qualifies as a small business.

    There are a few other entities that may qualify for a government loan. For example, accommodations and food services companies with more than one physical location may apply. This is true as long as they have less than 500 employees at each location.

    Other entities that are eligible include 501 non-profit organizations and Veterans organizations. Businesses with a Tribal designation under the Small Business Act may also be eligible.

    Finally, the government recognizes the growing freelance and self-employment workforce. For this reason, independent contractors, sole proprietors, and self-employed workers may be eligible for the PPP.

    Loan Amount Calculation With Employees

    PPP Loan Forgiveness Application and Instructions Update

    Start by calculating your gross income minus any payroll costs as reported on a 2019 or 2020 Schedule C. This can be found by taking the amount reported on line 7 and subtracting the amounts in lines 14, 19, and 26. Put this amount in box A.

    In box B, divide this value by 12. If the value is greater than $8,333.33, you must use $8,333.33.

    In box C, you must report your average payroll expenses. You can review how to calculate the average monthly payroll expense in Part 2 of our form 2483 overview above.

    Finally, add boxes B and C together. Multiply this amount by 2.5 to find your PPP loan amount. PPP loan amounts are capped at $2 million. Put the lesser of your calculated loan amount and $2 million dollars in your Loan Request Amount box.

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