If you’re a small business owner considering applying for a PPP loan , you may be wondering when the best time to do so is. Here’s what you need to know.
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What is a PPP loan?
What are the eligibility requirements for a PPP loan?
To be eligible for a PPP loan, you must:
-Have been in operation on February 15, 2020
-Have paid employees whom you are paying during the covered period
-Show a decline in gross receipts of 25% or more in any quarter in 2020 compared to the same quarter in 2019
What are the terms and conditions of a PPP loan?
In order to qualify for a PPP loan, you must be a small business owner, self-employed individual, or independent contractor who was in operation as of February 15, 2020 and had employees for whom you paid salaries and payroll taxes. You must also demonstrate that your business has been affected by the coronavirus pandemic.
If you do not have any employees, you can still apply for a PPP loan if you can show that your business has been impacted by the coronavirus pandemic.
PPP loans are available through June 30, 2020.
How to Apply for a PPP Loan
Applying for a Paycheck Protection Program (PPP) loan may seem like a daunting task, but it doesn’t have to be. The PPP loan application process is relatively simple and straightforward, and there are a few things you can do to make sure that you are prepared before you apply. In this article, we will walk you through the PPP loan application process step-by-step so that you know what to expect.
When to apply for a PPP loan?
As small businesses around the country face closures and layoffs due to the coronavirus pandemic, many are turning to the Paycheck Protection Program (PPP) for assistance.
The PPP is a loan program administered by the Small Business Administration (SBA) that provides loans of up to $10 million to small businesses and non-profit organizations that have been impacted by the pandemic.
The loans are 100% forgivable if the borrower uses the loan proceeds for eligible expenses, such as payroll costs, rent, mortgage interest, or utility payments.
The PPP has been hugely popular, with over $349 billion in loans approved as of April 16th.
Given the high demand for PPP loans, there is a lot of confusion about when and how to apply. Here are some tips to help you navigate the process:
1. Check eligibility requirements: The first step is to make sure you meet the eligibility criteria for a PPP loan. You can find a full list of eligibility requirements on the SBA website.
2. Gather required documentation: Before you begin your application, make sure you have all of the required documentation handy. This includes your most recent tax return, payroll reports from the last 12 months, and information about your outstanding debts.
3. Choose an SBA-approved lender: You will need to apply for a PPP loan through an SBA-approved lender. There are thousands of lenders participating in the program, so shop around to find one that best meets your needs. 4.Submit your application: Once you have gathered all of your documentation and chosen a lender, you can begin your application online or through your chosen lender’s website. The application process is relatively straightforward and should take less than an hour to complete.
5. Wait for approval: Once you have submitted your application, it will take approximately two weeks to receive loan approval from the SBA. You will then need to work with your chosen lender to finalize the loan agreement and disbursement process.
How to apply for a PPP loan?
The Paycheck Protection Program (“PPP”) is a loan designed to provide a direct incentive for small businesses to keep their workers on the payroll.
If you’re a small business owner, independent contractor, or self-employed individual, you may be eligible for a PPP loan. To apply, you’ll need to complete and submit a PPP Loan Application to your lender.
The PPP Loan Application asks for basic information about your business, such as your business name and address, the names of your owners and employees, and your average monthly payroll expenses. You’ll also need to provide documentation to support your application, such as tax forms and payroll records.
If you’re approved for a PPP loan, you’ll receive the funds in two installments: The first installment will be dispersed when you sign the loan agreement, and the second installment will be dispersed eight weeks after you receive the first installment.
What to do after you receive a PPP loan?
After you have applied and been approved for a PPP loan, the next step is to start using the loan funds to keep your business afloat. You can use the funds for payroll, mortgage or rent, utility bills, and other expenses. The goal is to use the funds to keep your business running so that you can keep your employees employed and keep your doors open.
How to use the loan proceeds?
The PPP loan proceeds must be used for payroll costs, interest on mortgages, rent, and utility services. At least 60% of the forgiven amount must be used for payroll. PPP loan proceeds that are spent on eligible payroll costs, mortgage interest, rent, and utility expenses may be eligible for forgiveness.
What documentation is required for loan forgiveness?
Depending on the amount of your loan, you will need to maintain certain documentation in order to have your loan forgiven.
If your loan is for $50,000 or less, you will need to maintain documentation that verifies:
-Payments of rent
-Payments on a mortgage interest payment
You will also need to maintain any documentation that verifies the number of full-time equivalent employees on your payroll and any reductions in salary or wages per employee.
If your loan is for more than $50,000, you will need to maintain all of the documentation listed above, as well as:
-Documentation verifying the total amount of cash compensation paid to employees during the covered period (or alternative covered period) that is less than $100,000 annualized; and
-Documentation verifying each individual employee’s compensation that is less than $100,000 annualized.