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What Small Businesses Need to know about PPP

Paycheck Protection Program (PPP) for Small Businesses: Take Advantage before new August 8th deadline expires

 

PPP is an SBA-backed loan that helps businesses keep their workforce employed during the Coronavirus (COVID-19) crisis. The lender is a financial institution approved by the SBA.

How To Apply

You can apply through any existing SBA 7(a) lender or through any federally insured depository institution, federally insured credit union, and Farm Credit System institution that is participating. Other regulated lenders will be available to make these loans once they are approved and enrolled in the program. You should consult with the bank you already have business with or, your local lender as to whether it is participating in the program. View a list of lenders participating in the Paycheck Protection Program by state.

1. Get informed
Apply to PPP
2. Prepare
3. Apply
4. Forgiveness
1. Get informed

Who can apply? You are eligible for a PPP loan if you are a small business and have 500 or fewer employees OR no greater than the number of employees set by the SBA as the size standard for certain industries.
Small businesses may include a 501(c)(3) nonprofit organization, a 501(c)(19) veterans organization, a tribal business, an individual who operates under a sole proprietorship, an individual who operates as an independent contractor, or an individual who is self-employed.
You must have been in operation on February 15, 2020.
You must submit such documentation as is necessary to establish eligibility such as payroll processor records, payroll tax filings, or Form 1099-MISC, or income and expenses from a sole proprietorship.

2. Prepare documentation

Fill out SBA Form 2483.
When can I apply? The program became available to small businesses and sole proprietorships for loans to cover their payroll and certain other expenses on April 3, 2020. Starting April 10, 2020, independent contractors and self-employed individuals could also apply. Initial program funds were depleted as of April 16, 2020, but additional funding was approved on April 23, 2020. The program’s deadline was on June 30, 2020, but that day was extended to August 8th. Eligible businesses are encouraged to prepare their applications now to be in the queue for these additional relief funds.

3. Apply
Determine eligibility, estimated loan value, and loan forgiveness potential. You can use these calculators: Smallbstrong.com Intuit Aid Assist SBA.com Where can I apply? You can apply through any existing SBA 7(a) lender or through any participating federally insured depository institution, federally insured credit union, and Farm Credit System institution. Other regulated lenders will be available to make these loans once they are approved and enrolled in the program. You should ask your local lender whether it is participating. What can I use these loans for? Proceeds from these loans may be used for payroll costs, including benefits; interest on mortgage obligations incurred before Feb. 15, 2020; rent under lease agreements in force before Feb. 15, 2020; and utilities for which service began before Feb. 15, 2020. View a list of lenders participating in the Paycheck Protection Program by state. Note: The lender will ultimately determine whether an eligible borrower is approved for a loan, whether PPP, EIDL, or Main Street Lending Program.
4. Forgiveness

How much of my loan will be forgivable? The loan will be forgiven if at least 75 percent of the forgiven amount must have been used for payroll costs. The other 25% can be used on mortgage interest, rent, and utility costs over the eight-week period after the loan is made, and if employee and compensation levels are maintained. Payroll costs are capped at $100,000 on an annualized basis for each employee, and due to the high volume of applicants, payments required on loan proceeds used for any uncovered expenses will be deferred for six months, and no collateral or personal guarantees are required. On May 15, 2020, the SBA and Treasury jointly released the PPP loan forgiveness application, which includes step-by-step instructions and incorporates several measures to reduce compliance burdens and simplify the process for borrowers.

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