Who Is Eligible To Apply For A Ppp Loan
The SBA has some guidelines on who can apply for a PPP loan. In terms of who may qualify for a First Draw PPP loan, the list includes:
- Sole proprietors, independent contractors, and self-employed persons
- Any small business concern that meets SBAs size standards
- Any business, 501 non-profit organization, 501 veterans organization, or tribal business concern of the Small Business Act) with the greater of:
- 500 employees, or
- That meets the SBA industry size standard if more than 500
For Second Draw PPP loans, you may qualify if:
- You previously received a First Draw PPP loan and will or have used the full amount only for authorized purposes
- Your business has no more than 300 employees
- You can demonstrate at least a 25% reduction in gross receipts between comparable quarters in 2019 and 2020
Your business has to have been affected by the COVID-19 pandemic in some way. And you must have been operational before February 15, 2020.
What Documents Do You Need To Apply For Ppp If Youre Self
To complete your PPP application, you will need the following documentation. We recommend gathering this information prior to starting the application.
- Copy of government-issued ID for all owners with 20%+ share in the business
- Proof that you were in business as of February 15, 2020:
- If you have W2 employees: IRS Form 941 from Q1 2020 or a third-party processing report from February 2020.
- If you do not have W2 employees: February 2020 bank statement or a customer invoice from February 2020
- If you have employees, youll need to provide proof of payroll costs. Choose one:
- W2s and W3 for your employees
- IRS Form 944
- IRS Form 941
- 3rd-Party Payroll Processing Report
Ppp Round 3 Eligibile Entities
While there are key differences between first- and second-draw PPP loans, the list of types of eligible entities was the same.
- Small businesses with 500 or fewer employees
- Businesses categorized under “Accommodation or Food Services,” such as restaurants and hotels that have 500 or fewer employees per location
- Independently owned franchises
- Self-employed workers, independent contractors, gig workers, and sole proprietors
- 501 businesses or tax-exempt nonprofit organizations tax-exempt 501 veterans organizations 31 tribal business concerns
- Housing cooperatives eligible section 501 organizations, or eligible destination marketing organizations with 300 or fewer employees and
- News organizations that are majority-owned or controlled by a NAICS code 511110 or 5151 business or a nonprofit public broadcasting entity with a trade or business under NAICS 511110 or 5151 with 500 or fewer employees.
- In addition, the business must have been in operation on .
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Update Or Confirm Existing Business Information
Make sure this section is completely filled out. There are a few sections below that you should pay extra attention to.
- Confirm the address is correct, including the 5-digit zip code .
- Verify that youve picked the correct business type. This has an impact on the documents youll be needed to submit.
- Enter or check that you have supplied a valid 9-digit tax ID for your business. Make sure there are no mistakes and that the ID number is nine digits long.
- Requested loan amount: Your loan amount should be 2.5 times your average monthly payroll expenditures. It should not be zero dollars. Hundreds of millions of dollars should not be required. You can use our PPP loan calculator for assistance.
- Verify that the number of employees is between 1 and 500. Enter 1 for sole owners and 1099 workers. 0 isnt a valid value.
Step : Confirm Payroll Documents
Please upload all documents that show proof of your average monthly pay. This section is optional if you do not have any W2 employees.
Required for certain types of businesses:
- IRS Form 941
- IRS Form 944 & IRS authorization in writing
- Forms W-2 and W-3 are required for all employees.
- 3rd-Party Payroll Processor Report
- Schedule K-1s for each partner
Depending on your business type, youll need to upload the following documents:
- IRS Form 941 from Q1 2020
- 3rd-Party Payroll Processing Report from February 2020
- Customer Invoice from February 2020
- IRS Form 1099-MISC from 2020
- IRS Form 1099-K from 2020
- STEP TEN: Obtaining Demographic Data
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Why Is The Ppp Necessary
American businesses did not close on their own accord. The United States government declared a public health emergency.
In order to keep the general public safe, state governments issued stay-at-home orders. These executive orders issued by a states Governor mandated that non-essential businesses close their doors.
At the same time, the government recognized the severe impact that stay-at-home orders would have on the American worker.
Under normal circumstances, a business that is not earning revenue would look to trim payroll. These businesses would have no choice but to lay off or furlough their employees.
Therefore, Congress passed the PPP to keep businesses afloat and employees on the payroll. The PPP is intended to be a temporary measure until the coronavirus pandemic is under control.
Round 3 Ppp Application Deadline
The Consolidated Appropriations Act, 2021 extended the Paycheck Protection Program through . However, the PPP funds have been exhausted, meaning the PPP program is no longer available as of May 31, 2021.
The amount of funds made available in the third round totaled $284 billion. Maximum loans of $10 million were available to first-draw borrowers, and loans up to $2 million were offered to second-draw, small business owners.
On March 30, 2021, President Biden signed the Paycheck Protection Program Extension Act, which gave applicants until May 31, 2021, to apply for a PPP loan, extended the covered period to June 30, 2021, and gave lenders until that date to process loans.
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How To Complete Your Ppp Loan Application
This page is intended for users that submitted a loan request through SBA.com® and are using SBA.com®s partner to gather and complete their PPP loan application. This page is not intended for anyone that wishes to apply through another source. SBA.com® is not a lender and you do not have to request a loan through SBA.com® or its partner to access PPP funds.
Loan Amount Calculation Without Employees
Start with your gross income from your 2019 or 2020 Schedule C. This amount is reported on line 7. 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. Multiply box B by 2.5 and use that value to fill box C. This will be your PPP loan amount.
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Can I Use Ppp To Refinance My Eidl Loan
Some borrowers have received both a PPP loan and an Economic Injury Disaster Loan . There are some very specific but limited circumstances where you can refinance an EIDL loan with PPP. Pay careful attention to the dates here!
- You must use PPP to refinance your EIDL if you received EIDL loan funds from January 31, 2020 through April 3, 2020 and used the EIDL loan funds to pay payroll costs.
- You may use PPP to refinance EIDL loan funds received from January 31, 2020 through April 3, 2020 and you used the EIDL loan for purposes other than payroll costs.
- You cannot use PPP to refinance an EIDL loan if you received EIDL loan funds before January 31, 2020 or after April 3, 2020. This is the majority of borrowers.
How To Apply For Cbns N5 Billion 100 For 100 Ppp Loan
Interested private-sector enterprises must submit applications to their PFIs together with the necessary documentation, which includes, among other things,
- Financial statements.
- Certified true copies of company registration documents evidencing the incorporation of the Company with the Corporate Affairs Commission
- Three years of audited financials, including the most recent management account of the company
- Evidence of the companys, promoters, and directors creditworthiness
- At least two credit reports of the company and the directors
- Business plan of the underlying project for which the facility is to be applied
- Detailed status report on projects capacity utilisation, production output, productivity/efficiency level, employment level, export capacity, and value creation
- Increased capacity utilisation, production output, productivity/efficiency level, employment level, export capability, and value creation after funding should be projected to represent the projects post-financing economic benefits.
Applicants shall notify the CBN of submitted applications via a dedicated online portal or
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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.
A Pair Of Best Practices
With so much uncertainty still in the PPP loan forgiveness process, CPAs could be excused for not being sure of what actions they should take to help borrowers be prepared. Lets close this article with a couple of tips on what CPAs can do now:
Document everything you can: Because the rules for PPP loan forgiveness contain so many gray areas, borrowers should know how they reached certain conclusions and what guidance they used to do so. Document how a conclusion was reached and the location of the guidance that informed that conclusion. You dont want to have to search through the many interim final rules, FAQs, and applications to track down guidance to explain the justification for information provided in the loan forgiveness application. In the event you need to find something you didnt previously think was relevant to your situation, check out the Resource Index of IFRs and FAQs at aicpa.org/sba .
Exercise your best judgment: This cannot be stressed enough. Borrowers and their advisers need to be aware of the guidance, read the application and application instructions thoroughly, and use that information to come to a reasonable conclusion. Sometimes, an answer will be hard to find amid all the shades of gray. This should be no surprise. As with all things PPP, the only certainty is uncertainty. This is where a CPAs judgment can make all the difference.
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A Guide To Applying For Ppp Loan Forgiveness
WASHINGTON, DC — Flanked by Vice President Kamala Harris and SBA Administrator Isabella … Casillas Guzman , President Joe Biden signs the Paycheck Protection Program extension in the Oval Office of the White House on March 30, 2021. The extension will push the deadline for Paycheck Protection Program loans from March 31 to May 31.
As the second round of the Paycheck Protection Program winds down on May 31, small business borrowers who have already secured their funding and spent their loan proceeds on covered expenses will soon be applying for loan forgiveness.
After all, the beauty of the PPP is that it was designed to keep Americans working by having their companies continue to pay their salaries. The program reimburses struggling small businessesultimately enabling them to surviveby allowing them to apply for forgiveness of the PPP loans they used to keep employees on payroll and certain other expenses.
Before applying, it is important to know the terms of forgiveness for both PPP Draw 1 and PPP Draw 2 loans.
First Draw PPP Loan forgiveness terms
First Draw PPP loans are made to eligible borrowers who qualify for full loan forgiveness if they have done the following during the 8- to 24-week period following their PPP loan disbursement:
· Maintained employee staffing and compensation levels
· Spent the loan proceeds on payroll costs and other eligible expenses and
· Used at least 60% of the loan for covering payroll costs
Key Facts About Ppp Loan Forgiveness
Borrowers eager to get PPP loans forgiven may want to know the deadline for forgiveness applications and whether they can submit applications early. If they are a co-owner in the company where they work, they may also want to know if they are subject to the stricter PPP compensation replacement calculations for owner-employees. Lets explore those three issues.
Forgiveness application due date: There is no defined deadline for borrowers submitting the forgiveness application, but borrower payments will be required 10 months after the end of the covered period as explained in FAQ No. 3 of the PPP Loan Forgiveness FAQs.
Borrower submission of a forgiveness application does trigger deadlines for lenders and the SBA. Section 2 of the Interim Final Rule on Revisions to Loan Forgiveness Interim Final Rule and SBA Loan Review Procedures gives lenders 60 days after the forgiveness application is received to issue a decision to the SBA. The SBA then has 90 days after receiving the decision from the lender to review the application and remit the forgiveness amount to the lender with any interest accrued through the date of the payment.
Early applications for loan forgiveness: These are permitted, but theres a catch: An eight- or 24-week covered period will still apply.
1. Any employee with pay that was reduced more than 75% of the 2020 quarter 1 rate of pay, would incur a salary or wage reduction:
a. 75% of $25 per hour = $18.75.
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Who Is Not Eligible For A Ppp Loan
There are certain businesses that cannot apply for a PPP loan. These same businesses are also ineligible for other types of SBA-backed loans.
Generally, youre excluded from PPP loan eligibility if any of the following are true:
- Your business has defaulted on federal loans
- Your business is delinquent on federal taxes
- Your business is located in a foreign country or is owned by undocumented aliens
- You run a pyramid scheme
- Your business limits membership to certain people
- You engage in discriminatory hiring practices
- Your business is government-owned
- You run a passive business
- Your business is engaged in lending or similar financial activities
- Your business is centered around illegal activity
- Your business primarily promotes religion
- You run a business that derives most of its revenue from products or live performances of a prurient sexual nature
- One or more of your business associates has a poor character
- Your business is primarily engaged in political or lobbying activities
- You run a speculative business
The SBA has said it will make exceptions for certain types of businesses that would otherwise be ineligible. But its best to clarify with the SBA first whether your business type will be allowed because applying for a PPP loan when you dont qualify can lead to serious consequences.
The Business Requirement To Qualify For The Second
If a business or individual received an initial PPP loan, they might qualify for the second round of funding, providing you meet the listed requirements below:
- Employ no more than 300 employees.
- Provide evidence of the use of the first PPP loan.
- Provide evidence of a drop of at least 25% in gross receipts for any quarter of 2020, compared with a similar quarter in 2019.
- Have not closed shop permanently. Businesses that have temporarily shut down or paused operations can receive a second-draw loan.
Apply for Business Term Loans
Up to $200K Unsecured Business Credit
- The PPP loans have an interest rate of 1%.
- The Loans that are issued have a maturity of five years.
- Will demand no collateral or personal guarantees for the loan processing.
- No fees will be charged for loan processing.
- Loan payments will be delayed for borrowers who apply for loan forgiveness until the SBA remits the borrowers loan forgiveness amount to the lender. If a borrower does not apply for loan forgiveness, payments are deferred ten months after the end of the covered period for the borrowers loan forgiveness .
The Second Draw PPP Loans can be used in financing payroll costs, including employee benefits. The funding may also be used in paying rent, utilities, worker protection costs related to COVID-19, mortgage interest, uninsured property damage costs caused by looting or vandalism during 2020, and certain supplier costs and expenses for operations.
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Can I Request More Money If I Used Net Profit
If you applied for PPP as a self-employed individual using net profit, you may discover you could get a larger loan by using gross income. The change in calculation methods is not retroactive. The IFR states that it applies to loans approved after the effective date.
However, it appears that whether you can get a larger loan amount depends on the status of your loan. Information provided by SBA to lenders states that a lender may cancel a PPP loan application and submit a new application on behalf of the borrower all the way up to the point where the loan funds have been disbursed to the borrower but a Form 1502 has not been submitted by the lender to the SBA.
Once the loan has been disbursed and the lender has filed Form 1502 with the SBA, there is no option to reapply for a larger amount.
Contact your lender if you have already submitted a loan application based on Schedule C net profits and have questions about the new calculations.
Keep in mind that if you already qualified based on the maximum owners compensation of $20,833 based on net profit on your Schedule C there is no need to do anything. .