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Begin your PPP loan application through Lendio to be matched with a PPP lender.
1% fixed rate APR for the life of the loan
Payments deferred for 6 months.
On qualified uses like payroll, mortgage interest, rent, and utilities
Small businesses need a lifeline right now, and the federal government has stepped up to offer Paycheck Protection Program loans. Because of the pared-down SBA requirements for PPP loans, more small businesses will qualify for the SBA coronavirus loans than previous SBA loan options.
The requirements for PPP loans are incredibly simple. Your business only needs to hit 2 criteria:
PPP loans will help small businesses, including sole proprietors and independent contractors, and private nonprofits maintain payrolls and continue necessary payroll-related payments like rent and utilities. The full allowable uses of the loan are:
PPP loans are calculated based on 2.5 times your business’s (or organization’s) monthly payroll costs. Payroll costs include compensation, as outlined above, along with other payroll-related costs like retirement payments, state and local taxes on payroll, payment for vacation or paid leave, group healthcare costs, and allowances for separation or dismissal. For a comprehensive outline of what is used and excluded, you can visit our PPP calculator, where you can also get an estimate on your potential PPP loan size.
PPP loans differ from Economic Injury and Disaster Loans (EIDLs). PPP loans are available to all US businesses based on the requirements above.
Due to overwhelming demand, applications have closed for EIDLs. If you previously applied for an EIDL, here’s how the loan differs from PPP. EIDLs are limited to designated disaster areas— for COVID-19, the SBA classifies that as all US states and territories—and the loans have more stringent requirements. Unlike PPPs, EIDLs/disaster loans must be repaid in full.
To qualify for a PPP loan, you must certify that your business has sustained economic injury due to the COVID-19 pandemic. This certification is required to ensure that funds are distributed to small businesses that have been hit the hardest by business disruptions due to the pandemic.
PPP loans are eligible to be forgiven, up to 100% of the loan principal if the funds are used appropriately. Here’s what you need to know about what qualifies, how to apply, and how to calculate your potential PPP loan forgiveness.
Any costs incurred and payments made in the first 24 weeks of the loan, following the origination date, under these set categories are eligible for forgiveness:
No more than 40% of the forgiven amount can be for non-payroll costs (i.e., mortgage interest, rent, and utilities).
If your business has laid off employees, that will also affect how much of your loan can be forgiven. Originally, employees needed to be rehired by June 30, 2020, in order for their salaries to be counted toward forgiveness. Under the Paycheck Protection Plan Flexibility Act (PPPFA), that deadline was extended until December 31, 2020. The PPPFA adds additional exceptions for small businesses and nonprofits that are unable to rehire workers by that date if:
Additional guidance from the government is needed as to exactly how a business would “demonstrate” an inability to rehire employees or that you were unable to return to the same level of business activity.
With employee count considerations and other factors, the total effect on your PPP loan’s forgiveness-eligibility depends on some complicated math that your funding manager can walk you through to give you a specific answer for your business.
Once a borrower receives a Preferred Lender Program (PLP) number for their loan, the loan is approved by the SBA, and funds are reserved for the borrower. Starting on the date a borrower receives a PLP number, the lender has 10 calendar days to disburse funds. The loan must be disbursed in full, and the 24-week loan forgiveness period begins the day funds are disbursed.
Due to overwhelming demand and high loan volume, many lenders struggled to fund loans from the first round within the 10-day period. The SBA issued guidance that for borrowers who had been issued a PLP number prior to April 28, lenders had 10 calendar days to disburse funds, starting on April 28.
If a lender cannot disburse funds due to delays from a borrower, like missing paperwork, the lender has 20 days to disburse funds. If they haven’t received the necessary information from the borrower by the end of that 20-day period, the loan may be canceled. If loan funds are designated for the refinancing of an Economic Injury and Disaster Loan (EIDL), the funds will be deducted from the disbursement amount and paid directly to the SBA by the lender.
For portions of the loan that are not forgiven, payments are deferred for the first 6 months. But keep in mind that interest will accrue during the 6-month deferral period.
Yes, you can qualify for a PPP loan even if you already have other loans, including other SBA loans. You cannot use the funds from PPP loans and other loans for duplicate use at the same time. For example, if you use a disaster loan (EIDL or loan advance) to pay your business’s May rent, you cannot also apply for a PPP loan to cover May rent.
– David L.
Apr 1, 2020