Before applying for a Paycheck Protection Program loan, you need to know how it works and how much you can borrow. You should also know about the maximum loan amount and qualification requirements. The Paycheck Protection Program is available for all sizes, and many small businesses are eligible for one. If you’re unsure if you qualify, read this article to help you decide if PPP loans suit your business.
Paycheck Protection Program
Paycheck Protection Program loans are an excellent way for small businesses to obtain cash flow assistance. These loans are 100% federally guaranteed and can help companies maintain payroll during a crisis. In addition, the loans are forgivable, and you can use the money to cover payroll costs, interest on mortgage obligations, rent, or utilities. The program can also help bring laid-off employees back on the payroll.
Paycheck Protection Program loans are small business loans backed by the Small Business Administration. They can be applied online. These loans can cover up to 24 weeks of payroll costs and qualifying non-payroll expenses. The program’s main objective is to help small businesses avoid bankruptcy by assisting them in paying their bills and retaining employees.
The process is typically handled online, and you’ll receive a decision within 60 days. You’ll also need to submit the required documentation. This includes bank records showing the payroll amount that qualifies. It’s essential to keep in mind that repayment is not automatic.
The PPP loan application process involves getting a loan from a lender. Once the partner approves the application, it is placed in the lender marketplace. The lender can accept or reject the application, and you will receive an email to let you know. Then, you need to follow the lender’s instructions.
You will need to provide information about your business, including the number of employees, business type, and start date. In addition, you will need to provide your Driver’s License. The document should be current and not expired. You can use the information in the PPP loan calculator to ensure you are asking for the correct amount.
The SBA has released guidance on the latest round of PPP loans. This round of funding will be available to businesses that meet a specific requirement. For example, companies with a revenue decrease of 25 percent or more can apply for the program.
Maximum Loan Amount
Borrowers must meet specific needs. Typically, the maximum loan amount is two million dollars. However, a second-draw PPP loan may have a higher maximum loan amount, which is four million dollars.
A PPP loan can be forgiven if it is fully expended on eligible expenses within the first 24 weeks of the loan. Previously, the rules required spending to be done within eight weeks. However, the PPPFA has changed the rules to allow businesses more flexibility. They can spend the loan proceeds on whatever they wish, as long as they spend at least 60% on payroll and other authorized expenses.
The maximum loan amount for PPP loans is two and a half times the business’ average monthly payroll. To apply for a PPP loan, the minimum monthly payroll for a company is $100,000. This amount may not be sufficient to cover the expenses of a more significant business. If you need to borrow more, you may want to apply for an EIDL program instead. The EIDL program allows businesses with no W2 employees to apply for a PPP loan.
Requirements for Qualifying
A small business can apply for PPP loans from approved lenders through the Small Business Administration (SBA). The SBA has supported various lending institutions, including private lenders, credit unions, and fintech companies. Before applying, check with your current lender to see if they participate in the PPP program. If you do not have an existing lender, you can use an online application from the SBA.
Some requirements must be met to qualify for a PPP loan. For example, self-employed businesses must file payroll tax forms for 2019 or 2020. In addition, faith-based organizations must follow SBA guidelines.
First-time PPP loans are available for small businesses with fewer than 500 employees. In addition, some companies, such as 501(c)(3) nonprofits, veteran organizations, and housing cooperatives, may qualify. However, businesses with more than 5,000 employees are not eligible for PPP loans.