PPP Loan is a program that provides financial aid for small business owners. The main purpose of this program is to assist each small business owner with their respective resources. It will help them to maintain payroll, hire back employees, and such necessities for their businesses and enterprises. Specifically, the Paycheck Protection Program will assist small business owners in funding a maximum of 8-week payroll cost and its benefits.
The Financial assistance from the program can be used for the payment of rent, mortgages, and utilities. The program ensures that the funds will benefit and help small enterprises and businesses throughout the United States. Moreover, the program continuously boosts the economy of the U.S., especially in the industry of sales, marketing, and business.
Eligibility for Small Business Owners
The Paycheck Protection Program Loan was created under the Coronavirus Aid, Relief, and Economic Security (CARES) Act. Originally, the program had an allocated budget of a total of $350 billion that ensures to benefit small business owners.
The PPP Loan program was administered by the Small Business Administration and supported by the U.S. Department of Treasury. Furthermore, the program already finished three different draws or rounds.
The rounds were created to cater to and assist more eligible small business owners. PPP Loans prioritize individuals that suffer from financial hardship from job retention and other expenses by their businesses.
PPP Loan and Loan Forgiveness
As the PPP Loan is not a grant, small business owners are required to repay the financial assistance that they received. The program applies a low-cost interest and wide range for its beneficiaries to be capable of paying the loan.
However, the federal government created the Paycheck Protection Program Loan Forgiveness. The program was associated with the Paycheck Protection Program Loan; it will serve as a huge help for small business owners to help them ease their respective loans.
As of now, PPP Loans and PPP Loan Forgiveness continuously support and assist small business owners throughout the United States.
What is the PPP Loan Forgiveness?
Loans from the PPP Loan can be forgivable. Paycheck Protection Program Loan Forgiveness serves as an extension of the PPP Loan. The program assists small business owners regarding their Paycheck Protection Program loans.
It enables each borrower to not repay the financial assistance they received from a loan. Furthermore, the Paycheck Protection Program Loan Forgiveness makes the loan a grant that does not need to be repaid.
Paycheck Protection Program Loan Forgiveness applies when small business owners use financial assistance with payroll costs, mortgages, rent, utilities, and other necessary expenses of their respective businesses or enterprises.
Small business owners can only apply for the PPP Loan Forgiveness once they used all amounts of the loan they receive from the PPP Loan. The application for the program is open at any time but it limits up to the maturity date of the loan.
However, if a small business owner were not able to apply after the 10-month covered period of the loan, they will not be able to apply for Loan Forgiveness. This means that they need to start the payment processes of their respective loans.
A Huge Aid For Small Business Owners
Paycheck Protection Program Loan Forgiveness serves as a huge aid for every small business owner that applied for the Loan. It will ease their financial hardships as the loan will soon become a grant. However, a small business owner must undergo a systematic and rightful process for PPP Loan Forgiveness.
Am I Eligible for the PPP Loan
As the Loan Forgiveness was associated with Paycheck Protection Program Loan, the eligibility requirements of the two are similar and also associated with each other. However, the list of qualified individuals for the PPP Loan and PPP Loan Forgiveness varies by each draw. The U.S Small Business Administration ensures the qualification rules of the applicants for the programs.
Applicants who will not meet the requirements below will be automatically disqualified from the programs.
For Paycheck Protection Program Loan:
First PPP Loan Draw
- Qualified individuals can be Sole proprietors, independent contractors, or self-employed persons.
- Small Businesses that meet the SBA’s size standard can also be eligible for the program.
- Businesses, veterans or non-profit organizations, and tribal businesses concerned with at least 500 employees.
- Businesses, veterans or non-profit organizations, and tribal business concerns meet the SBA’s guidelines with more than 500 employees.
Second PPP Loan Draw
- Qualified applicants for the first draw of the PPP Loan.
- Businesses, veterans or non-profit organizations, and tribal businesses are concerned with a maximum of 300 employees.
- Must demonstrate at least a 25% loss from Gross Income comparing 2019 and 2020.
For Paycheck Protection Program Loan Forgiveness:
Loan Forgiveness First Draw
- Loans from PPP must be used for payroll costs and other eligible expenses.
- Must have a maintained compensation level and employees.
- Over 60% of the financial assistance was used for payroll costs.
Loan Forgiveness Second Draw
- Loans from Paycheck Protection Program must be used with payroll costs and other eligible expenses.
- Must have a maintained compensation level and employees similar to First PPP Draw.
- Over 60% of the financial assistance was used for payroll costs.
How Can I Apply for the Paycheck Payment Program?
To apply for the Paycheck Protection Program, you must find a PPP Lender that will assist you. Visit the SBA official website for more information about PPP Lenders. The process can be done through an online application. Just prepare the documents that you will need for the application process. Remember to check first whether you’re eligible for the program before applying.
How Can I Apply for the PPP Loan Forgiveness?
For the application of Loan Forgiveness, check first whether your PPP Lender is participating in the Loan Forgiveness. You may check it through the SBA website. After checking, you can prepare the necessary documents for the application process.
Submit the forgiveness form and documentation to SBA to your PPP Lender to process the application. Always monitor your forgiveness application until you receive confirmation that your loan is forgiven.
Required Documents for the Application
The documents needed for the application for a PPP Loan and PPP Loan Forgiveness are different. List of the required documents for respective programs.
Paycheck Protection Program Loan
- Payroll processor records
- Payroll tax filings
- Payroll tax forms from 2019 or 2020 (Forms 941, 940, and W-3)
- Form 1099-MISC records
- Schedule C for a sole proprietorship
- Bank account statements
- Tax Forms
- Form 941
- Payment receipts