Go over the different types of PPP loans and how much you can get from each one.
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What is a PPP Loan?
A PPP loan is a loan that is given to a small business in order to help them keep their employees during the COVID-19 pandemic. The loans are given through the Small Business Administration (SBA) and are 100% guaranteed by the federal government.
The loans are given on a first come, first serve basis and there is a limited amount of money available. The maximum amount that a business can receive is $10 million. The loan can be used for payroll, rent, utilities, and mortgage interest.
The loans are forgiven if the business keeps their employees during the pandemic. If the business lays off any employees, they will have to repay the loan.
How Much Can I Get from a PPP Loan?
The PPP loan is a loan that is available to small businesses and self-employed individuals in order to help them keep their businesses afloat during the COVID-19 pandemic. The loan is worth up to 2.5 times your monthly payroll costs, and can be used for a variety of expenses, including payroll, rent, utilities, and mortgage interest.
The Loan Amount
Your loan amount will be equal to 2.5 times your average monthly payroll costs from the last year, up to $10 million. If you’re a seasonal employer or new business, your loan amount will be based on your average monthly payroll for the time period between February 15th and June 30th of this year.
The Forgiveness Amount
The amount of your loan that can be forgiven depends on how you use the loan. To be eligible for loan forgiveness, you must use the loan for eligible expenses including payroll costs, mortgage interest, rent, and utilities. At least 60% of the forgiven amount must go towards payroll costs. You can read more about eligible expenses here.
Loan forgiveness is determined by your lender and they will report to the SBA whether or not you are eligible for forgiveness. You can begin making requests for loan forgiveness after 10 months from when your covered period ends. If you have not received a decision from your lender within 60 days after submitting your request, you can reach out to the SBA directly for help.
Keep in mind that even if your entire loan is forgiven, you are still responsible for paying any taxes due on the forgiven amount. The forgiven amount may also be considered taxable income by your state.
How to Apply for a PPP Loan
The Application Process
To apply for a PPP loan, you will need to fill out and submit the PPP Loan Application Form 3508. This form is available on the Small Business Administration (SBA) website.
You will need to provide some basic information about your business, including your business name, address, and contact information. You will also need to provide your Employer Identification Number (EIN).
Once you have submitted the form, you will need to provide some additional documentation to the lender that is processing your loan. This documentation may include financial statements, tax returns, and payroll reports.
The application process can take a few weeks, so it is important to start early. Once your loan has been approved, you will receive the funds within 10 days.
The Documentation Required
In order to secure a PPP loan, you will need to provide documentation verifying:
-Your payroll costs for the last 12 months
-Your business’s tax filings for the last 2 years
-Your business’s ownership structure
-Your Personal Identification Number (PIN) from the SBA
If you are self-employed, you will need to provide documentation verifying your:
-Income for the last 2 years
-Expenses for the last 2 years
What Happens if I Don’t Repay My PPP Loan?
The Consequences of Not Repaying Your PPP Loan
If you don’t repay your PPP loan, the Small Business Administration (SBA) will be left to shoulder the loss. Here’s what that means for you and your business:
The SBA will send you a notice demanding repayment of the loan amount, plus any accrued interest and fees.
If you don’t repay within 30 days, the SBA will begin collection procedures, which could include:
-Withholding money from your business’s future SBA loan disbursements
-Referral to a commercial collection agency
-Reporting the debt to credit bureaus
-Garnishing your wages
-Filing a federal tax lien against your business
-Seizing assets belonging to you or your business