PPP Loan which is short for Paycheck Protection Program Loan is a loan that is administered by the Federal Small Business Administration (SBA). This loan is given to organisations or self-employed individuals that meet the criteria.
What are PPP Loans? – PPP
The loan was prepared for small businesses which are facing downtime to keep their workers on the payroll. PPP Loans can be forgiven if the money is used for reasonable costs like payroll, rent, mortgage interest, utilities, worker protection, supplier costs, operations costs and even property damage costs.
PPP Loans Eligibility
These loans can be given to a wide range of borrowers provided they were in business on or before the 15th of February 2020. To be eligible for this loan, you must have not more than 500 employees in your location. Additionally, 501(c)(6) nonprofit organisations and destination marketing organizations may be eligible for PPP loans if they meet the requirements on lobbying and size
The loans are also eligible for Sole proprietors, self-employed workers and independent contractors or side gig workers. This loan is not available for publicly traded companies. Some funding has now been set aside to help specific types of groups
PPP Loan Forgiveness
By loan forgiveness, I mean you may be required to forfeit this loan under certain conditions. Check them out below.
First Draw PPP Loan forgiveness terms
Borrowers having the first draw PPP loans can be forgiven under the following terms within the 8th to 24th week of the disbursement of this loan.
- If the compensation levels of the employees are properly balanced
- This loan can be forgiven if at least 60% of the loan proceeds are spent on payroll costs
- If the loan is well spent on payroll and qualifying costs.
Second Draw PPP Loan forgiveness terms
These loans can be forgiven under the following terms during the first 8 -24 weeks of the loan disbursement.
- If the employee and compensation levels are properly maintained just the same way it is required for the first draw loan forgiveness
- The loan is 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 – Apply for PPP Loan
This application can be done through any PPP loan lender with the steps below.
To apply for a loan 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. After doing that, you can then gather all supporting documents for the application.
When you are done gathering the documents you can then apply through a PPP loan lender. some banks give priority to current account holders, so if you have a relationship with any bank offering PPP loans, you are advised to apply at that bank.
Apart from banks, 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 such loans and deliver funding faster than some banks.
