PPP Loan is short for Paycheck Protection Program loan. It is administered by the federal Small Business Administration (SBA) and it provides COVID-19 relief funding to small businesses and individuals who are self-employed or independent contractors if they meet the size standards of the program.
PPP Loan
PPP loans are designed to provide a form of direct incentive for small businesses to keep their workers on the payroll. PPP loans can be forgiven if the money is used for qualifying costs like payroll, rent, mortgage interest, utilities, worker protection, supplier costs, operations costs, and property damage costs.
Who can Apply for a PPP Loan?
First-time PPP loans can go to a wider range of borrowers, provided they were in business on or before Feb. 15, 2020. Eligibility for this loan will now include new outlets having not more than 500 employees in a location. Additionally, 501(c)(6) nonprofits and destination marketing organizations may be eligible for PPP loans if they meet limits on lobbying and size.
Sole proprietors, self-employed workers, and independent contractors or side gig workers are also eligible for PPP loans. Publicly traded companies are not eligible for the latest PPP round. Some funding has now been set aside to help specific struggling groups.
PPP Loan Forgiveness
PPP loans can be forgiven under the following terms.
First Draw PPP Loan Forgiveness Terms
First Draw PPP loans made to eligible borrowers qualify for full loan forgiveness only if the following applies during the 8- to 24-week covered period following loan disbursement:
- Employee and compensation levels are properly maintained,
- The loan proceeds are well spent on payroll costs and other eligible expenses,
- At least 60% of the loan proceeds are spent on payroll costs
Second Draw PPP Loan Forgiveness Terms
Second Draw PPP loans made to eligible borrowers qualify for full loan forgiveness if the following applies during the 8- to 24-week covered period following loan disbursement:
- Employee and compensation levels are properly maintained in the same manner as required for the First Draw PPP loan,
- The loan proceeds are well spent on payroll costs and other eligible expenses,
- If at least 60% of the loan proceeds are spent on payroll costs
How to Apply for a PPP Loan
Want to apply for a PPP loan? Here’s how to do that;
Business owners are expected to fill out a PPP loan application, SBA Form 2483 for first-draw loans, and SBA Form 2483-SD for second-draw loans, and after that, gather all supporting documents for the application.
You can then apply for a new PPP loan through any participating PPP lender. Note that some banks give priority to current account holders, so if you have a relationship with a bank offering PPP loans, you are advised to apply there first.
Some fintech companies and online lenders, such as BlueVine, accept PPP loan applications. These companies offer a streamlined loan application process and they may be able to approve loans and deliver funding even quicker than most traditional banks.
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