Checklist Of Eligibility Requirements
To be eligible for a PPP loan, you must:
-Be a small business, nonprofit organization, veterans organization, or Tribal business concern that was in operation on February 15, 2020-Have employees for whom you paid salaries and payroll taxes-Have used or will use the loan proceeds to pay these salaries and payroll taxes
In addition, you must attest that:-You are an eligible recipient of a PPP loan.-The uncertainty of current economic conditions makes this loan necessary to support your ongoing operations.-You understand that this PPP loan is for authorized use only. Proceeds must be used to retain workers and maintain payroll or make mortgage, lease, and utility payments.-You will provide the lender with documentation verifying the number of full-time equivalent employees on your payroll and the dollar amount of mortgage interest, rent, and utility payments you are making.-You accept these terms and conditions of the Paycheck Protection Program set forth by the SBA.
How To Get Your Ppp Loan Forgiven
Paycheck Protection Program loans have helped many companies make it through COVID-19-related disruptions. Here is what businesses need to do to get their PPP loans forgiven.
By: Sean Ludwig, Contributor
The Paycheck Protection Program was created in March 2020 as part of the CARES Act, with revisions in June 2020 and December 2020.
The SBA has launched its own PPP loan forgiveness portal. It is intended to simplify the forgiveness process and allow some borrowers to apply for forgiveness directly through the SBA portal. You can find that portal here. To qualify to use the portal, businesses must have borrowed $150,000 or less and, importantly, PPP lenders must opt in. Because not all lenders have opted in, businesses must first determine if theirs has. You can find a list of participating lenders here. If your PPP lender has not opted into the SBA direct forgiveness portal or you’ve borrowed more than $150,000, you will still need to apply for forgiveness through your lender. Here is a complete guide on PPP loan forgiveness from the U.S. Chamber of Commerce.
One of the most extensive ways the federal government sought to aid businesses suffering from coronavirus-related shutdowns and disruptions was implementing the Paycheck Protection Program .
Required Certifications For Ppp Loans
Businesses were required to certify that pandemic-related economic uncertainty made the loan request necessary to support ongoing operations and that funds would be used as required. This included using no more than 40% for non-payroll costs. This requirement applied to both first- and second-draw PPP loans.
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What Else Do I Need To Apply
In addition to the tax documents you used to calculate your loan amount, you will need the following documentation:
- A copy of your drivers license or passport.
- A voided check for the deposit of your PPP loan. Some lenders require you have a business bank account. If you dont have one, we recommend opening one so your PPP funds can be deposited into that account. This will make it easy to track how you spend PPP funds.
- For second draw PPP loans you must have the number from your first PPP loan. SBA loan numbers have eight numbers followed by a dash then two more numbers .
Third Round Ppp Funding Was Offered To Help Employees And Keep Businesses Afloat
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The Consolidated Appropriations Act, 2021 , signed into law by President Donald Trump on Dec. 27, 2020, included new funding for the Paycheck Protection Program , which expired Aug. 8, 2020.
The PPP was a U.S. loan program established to help small businesses affected by the economic slowdown associated with the COVID pandemic to pay the wages of employees and certain other expenses. It was created by the CARES Act and originally included $349 billion in funding. However, that money was gone within two weeks, resulting in the second round of funding totaling $310 billion.
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Whats Different About The Second
The CRRSAA created the opportunity for businesses and nonprofits to apply for a second PPP loan if they meet certain criteria. The second-draw loans are more targeted than first-time PPP loans, and to qualify, businesses must 1) have previously received a PPP loan and used the full amount only for authorized uses 2) have fewer than 300 employees and 3) have had a 25% reduction in gross receipts during at least one quarter of 2020 versus the same quarter of 2019. The maximum loan size for a second PPP loan is $2 million versus $10 million for a first-time PPP loan. Additionally, the SBA has that may be useful.
Access Your Ppp Application
When you submit a PPP loan request on SBA.com®, you are first redirected to your PPP application with our partner. If you just submitted your request, you should already be on this page. You will complete your application with our partner and then once it has all required information and documentation it will be finalized and submitted to a lender in our partners approved PPP lender marketplace.
If you have left the application portal already, heres how you return to your application. You should have received an email from our partner with your account details to access the application portal. If you cant find this email, you can access your application portal by resetting your password using the email address from your loan request and then logging in. Your login information for the portal will be the same whether you are logging into the partners portal through SBA.com® or through our partner. Once logged into the application portal select Edit Application to review your existing information and complete any missing requirements.
You must take further action from here to complete your application with our partner and have it submitted to a lender.
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How Is My Ppp Loan Amount Calculated
The SBA has issued specific instructions for how all PPP lenders must calculate the loan amount.
If this is your second PPP loan, and your business is not a restaurant or hotel, the PPP loan amount will be equal to your verified average monthly payroll on file from your PPP loan application x 2.5. For businesses that are restaurants or hotels, the PPP loan amount will be equal to your verified average monthly payroll on file from your first PPP loan application x 3.5.
How Long Does It Take To Get An Sba Express Loan
Of course, situations arise in which you just cant wait that long. In cases where emergency funding is needed, you may be interested in the SBA Express Program. Its a slimmed-down version of the 7 product in that you can only borrow up to $350,000. But, this lends itself to faster SBA loan approval times.
The SBA promises a turnaround time of 36 hours for their express loans. But, that doesnt include the time it takes for the lender to approve the loan, which could tack on another few weeks. So, instead of 60-90 days, youre looking at 30-60 days for the SBA loan processing time when all is said and done.
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Check Out One Of The Fintech Companies That Is Processing Ppp Loans
There are several fintech companies that are working directly with SBA-approved partners to process loans. Not every organization from the first round is participating, but a good portion are already taking applications. The biggest issue with these companies is that for the most part, they are using technology to fully automate the process. This makes it easy and simple for current customers that have that info on file but can lead to misfires for those that just joined or that are just applying.
If there is something wrong or filled in incorrectly they will just reject you, most of them without telling you what is actually the problem. But it doesnt hurt to get in line and see what happens.
Second Draw Ppp Loans
The stimulus legislation created second draw PPP loans for those who:
- Previously received a first draw PPP Loan and has or will use the full amount only for authorized uses by the date the second loan is disbursed
- Have no more than 300 employees and
- Can demonstrate at least a 25% reduction in gross receipts between comparable quarters in 2019 and 2020.
More information about qualifying for a second draw PPP loan can be found here.
The calculation for second draw loans is similar to first draw loans with one exception: if your business has a NAICS code beginning in 72 you may qualify for a loan of 3.5 times average monthly payroll. Other businesses will qualify based on 2.5 times average monthly payroll as before.
The March 3, 2021 Interim Final Rule describes the following method for calculating the loan amount:
The maximum amount of a Second Draw PPP Loan to a borrower that has income from self-employment and files an IRS Form 1040, Schedule C, is calculated as follows, depending on whether the borrower has employees:
For a borrower that has income from self-employment and does not have any employees, the maximum loan amount is the lesser of:
the product obtained by multiplying: the net profit or gross income of the borrower in 2019 or 2020, as reported on IRS Form 1040, Schedule C, that is not more than $100,000, divided by 12 and 2.5 .
This amount cannot exceed $29,167 for NAICS code 72 borrowers and $20,833 for all other borrowers.
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How To Get Approved For A Ppp Loan
If youre a small business owner, you may be wondering how to get approved for a PPP loan. The Paycheck Protection Program is a loan program designed to help small businesses keep their employees on the payroll during the coronavirus pandemic. In this article, well give you some tips on how to get approved for a PPP loan.
Heres How To Land A Ppp Loan For Your Small Business
by Dana George |Updated July 25, 2021 – First published on April 22, 2021
Image source: Getty Images
Applying for a PPP loan is easier when you prepare ahead of time.
The American Rescue Plan Act of 2021, signed into law by President Joe Biden on March 11, adds $7.5 billion to the Paycheck Protection Program. If you’re a business owner who’s been financially impacted by COVID-19, you currently have until May 31, 2021, to apply for a PPP loan. The process is easy and can be accomplished in five steps.
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Sole Proprietorships And Single
If the PPP loan application process for sole proprietors is unchanged for 2021, you will need a tax-ready 2019 or 2020 Schedule C from your personal tax return. While it does not have to be filed, it must be complete and accurate.
You must have reported a net profit on your Schedule C in 2019 or 2020.
If you also have employees on payroll, you do not need a net profit, but you must have payroll tax forms 940 and 941/944 for 2019 or 2020.
How To Apply For A Ppp Loan
Getting approved for a PPP loan is a fairly simple and straightforward process. The first step is to find an SBA-approved lender that offers the program. You can use the SBAs Lender Match tool to find lenders in your area.
Once youve found a lender, youll need to fill out and submit a PPP loan application. The application will ask for information about your business, such as your revenue, expenses, and number of employees. Youll also need to provide your personal information, such as your Social Security number and date of birth.
Once youve submitted your application, the lender will review it and decide whether or not to approve you for a PPP loan. If you are approved, the lender will fund your loan and you can use the money to help keep your business afloat during the pandemic.
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Everything You Need To Know About Ppp Loans In 2021
Disclaimer: This article is updated as of January 22, 2021. However, information around the PPP can change quickly, so check back here or on the SBA site for the latest details.
If your business is struggling after nine months of COVID-19-related shutdowns and challenges, help is on the way. Congress recently passed the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act, in part to reauthorize the Paycheck Protection Program that ended in August 2020.
The new COVID-19 relief bill has two main purposes: 1) to offer funding to small businesses that didnt receive a PPP loan the first round and 2) to give certain qualified businesses the chance to get a second PPP loan.
Once the SBA reopens the program, it will run through March 31, 2021, or until funds run out . Small businesses may be able to apply for a loan as early as January 15, 2021.
To get prepared for a PPP loan, its critical to read up on the latest eligibility requirements and terms so you know where you stand and how to prepare. The following guide outlines everything you need to know about the updates before you apply for PPP loan funding.
Are There Caps On The Amount Of Loan Forgiveness Available For Owner
Yes. Forgiveness is capped at 2.5 months worth of an owner-employee or self-employed individuals 2019 or 2020 compensation . The individuals total compensation may not exceed $100,000 on an annualized basis, as prorated for the period during which the payments are made or the obligation to make the payments is incurred.
For example, for borrowers that elect to use an eight-week covered period, the amount of loan forgiveness requested for owner-employees and self-employed individuals payroll compensation is capped at eight weeks worth of 2019 or 2020 compensation or $15,385 per individual, whichever is less, in total across all businesses. For borrowers that elect to use a ten-week covered period, the cap is ten weeks worth of 2019 or 2020 compensation or $19,231 per individual, whichever is less, in total across all businesses. For a covered period longer than 2.5 months, the amount of loan forgiveness requested for owner-employees and self-employed individuals payroll compensation is capped at 2.5 months worth of 2019 or 2020 compensation in total across all businesses.
Owner-employees with less than a 5 percent ownership stake in a C- or Scorporation are not subject to the owner-employee compensation rule.
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What Are The Loan Forgiveness Requirements
To qualify for full loan forgiveness, you need to spend no less than 60% of your total loan amount on payroll costs. You can then spend up to 40% of your loan amount on rent, mortgage interest, utilities, and the expanded covered costs, which include: operations expenditures, supplier payments, property damage costs, and worker protection expenses.
Your covered period which is when you must spend at least 60% of your funds on payroll can be between eight and 24 weeks after your loan originates. To be forgiven, you must spend the remainder of your funds before September 30, 2021.
If you receive a loan of $150,000 or less, you can submit a one-page document to your lender as part of the simplified forgiveness application. However, if you receive more than $150,000, you have to submit the following:
- A document verifying the number of full-time employees on payroll and their pay rates
- Documents verifying payments on covered mortgage obligations, lease obligations, and utility payments
- A document certifying that the materials you submitted are true and that you did in fact use your PPP loan funds to retain employees, make interest payments on a mortgage, pay rent, or cover utilities
Even if youre eligible for the simplified forgiveness application, its still a good idea to hold onto all your relevant receipts, documents, and accounts from this time. You need to have proof you spent your funds correctly in case you get audited.
Contact Your Bank Or Lender
Each lender has its own policies surrounding how PPP loans are tracked, so you will need to contact your specific lender directly for more information. Fortunately, though, many banks and lenders have provided online information and portals to make tracking your PPP loan quick and easy. Heres what to expect from some of the biggest lenders participating in the PPP program:
Each PPP lender will have a somewhat different process for checking the status of your loan application. Asking your lender about the status of your application through normal processes such as contacting a bank branch directly or contacting a customer care center may not work due to the volume of applications being processed. Instead, youll have to follow the specific instructions of your bank or lender concerning PPP loan applications.
Unfortunately, Ive seen reports from business owners who have not been provided any means of checking on the status of their PPP loan application by their lender. If this happens to you, keep trying to contact your lender about the matter through any channel the lender provides. You may eventually find someone who can point you in the right direction.
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