What is a PPP Loan?

The Paycheck Protection Program (PPP) was created by the U.S. Small Business Association (SBA) during the COVID-19 pandemic to help small businesses and nonprofits in the U.S. via potentially forgivable, government-backed loans. 

Originally part of the CARES Act in March 2020, the PPP was authorized to distribute over $600 billion in loans to small businesses and eligible self-employed individuals impacted by COVID-19. 

This initial program closed applications in August 2020. Then in December 2020, Congress passed the Coronavirus Response and Relief Supplemental Appropriations Act (CRRSAA). The CRRSAA approved additional funding for loans while adjusting criteria for eligibility based on first-time and second-time loans.

PPP loans are backed by the SBA but issued by approved private lenders and credit unions.  

The PPP stopped taking loan applications on May 31, 2021.

 

PPP Loan Background

The intent of the PPP was to help U.S. small businesses remain operational through COVID-19-related business interruptions while also keeping their employees working and employed. As one of the conditions for loan forgiveness, businesses were required to spend at least 60% of the PPP loan amount on payroll.

PPP loans were available during two application periods.

The PPP closed permanently to loan applicants on May 31, 2021.  

 

PPP Loan Forgiveness

While PPP loans offered the potential for loan forgiveness, small businesses seeking loan forgiveness needed to meet and document all eligibility requirements. Businesses seeking PPP loan forgiveness were required to apply no later than 10 months following the last day of their covered period. Get details about applying for PPP loan forgiveness

IMPACT: Across all 50 states, an estimated 72-96% of small business payrolls were covered by PPP loans (source: SBA)

PPP Loans Approved by State

Since 2020, the federal government has approved nearly $800 billion in funding for companies in all 50 states, plus Puerto Rico, the Virgin Islands, American Samoa, Guam, and the Northern Mariana Islands territories. 

With over 1.2 million loans, California had the most loans approved for the PPP, followed by Florida, Texas, New York, and Illinois. The Small Business Administration has disclosed over 11.5 million loans through the PPP. Check the table below for PPP loans approved by state discoursed by SBA. 

 

State	Total	$150k or less	$150k – $350k	$350k – $1m	$1m – 2m	$2m – 5m	$5m – 10m
California	1,270,600	1,139,985	75,584	40,202	10,110	4,064	566
Florida	983,346	923,310	37,661	17,107	3,706	1,358	179
Texas	938,534	862,350	44,848	22,917	5,656	2,380	312
New York	734,817	660,707	42,059	22,769	6,130	2,628	415
Illinois	620,050	579,236	22,877	12,647	3,579	1,442	229
Georgia	553,322	527,490	15,826	7,314	1,851	715	112
Ohio	351,995	319,349	18,490	10,011	2,757	1,169	183
Pennsylvania	342,421	303,886	21,936	11,875	3,148	1,356	191
New Jersey	302,438	269,904	18,660	10,146	2,520	1,040	150
Michigan	291,533	261,732	17,216	8,988	2,405	1,006	165
North Carolina	258,994	236,166	14,260	6,418	1,459	599	81
Missouri	233,144	216,794	9,489	5,026	1,198	536	93
Tennessee	229,731	213,862	9,449	4,764	1,141	427	74
Minnesota	225,357	205,628	11,082	6,127	1,641	736	119
Virginia	221,084	197,816	13,792	6,902	1,740	718	99
Louisiana	217,331	203,663	7,890	4,168	1,098	429	74
Massachusetts	217,230	189,757	15,781	8,486	2,176	872	137
Washington	195,234	171,481	13,987	7,060	1,772	807	111
Colorado	192,264	172,521	11,932	5,780	1,376	556	86
Maryland	190,719	171,741	10,895	5,885	1,514	602	77

 

 

Can I Apply for a PPP Loan in 2022?

The PPP closed PPP loan applications in May 2021 and is unlikely to be refunded in 2022 or beyond. Existing borrowers may still be eligible for loan forgiveness. However, there are other small business loan options available.   

 

PPP Loan Alternatives 

Covid-19 economic injury disaster loans

The COVID-19 Economic Injury Disaster Loan (EIDL) program provides financing for small businesses economically impacted by COVID-19. COVID EIDL loans can be used for normal operating expenses and working capital. Unlike PPP loans, EIDL loans are not forgivable and must be repaid.

As of January 1, 2022, the SBA stopped accepting applications for new COVID EIDL loans or advances. However, the SBA still offers other funding options, including traditional SBA loans. 

SBA 7(a) loans

The SBA 7(a) Loan Program is the SBA’s most common loan program. It provides loans for small businesses with special requirements such as:

• Funding business purchases that include real estate
• Short- and long-term capital
• Purchasing equipment, furniture, or supplies
• Refinancing business debt

Check your eligibility for an SBA 7(a) loan here.

PPP Forgiveness

If you’ve already borrowed a PPP loan, you may still be eligible for loan forgiveness. You must apply for loan forgiveness within 10 months of the last day of the covered period (which typically lasts 2 years). 

Borrowers who apply within this period are eligible for forgiveness if: 

• Loan proceeds are spent on payroll costs and other eligible expenses.
• Employee and compensation levels are maintained.
• At least 60% of the proceeds are spent on payroll costs.

Lendio’s Role in the Paycheck Protection Program

In support of the PPP, Lendio quickly transformed its operations to help small businesses with PPP funding, adding more than 500 new team members to support the effort. 

 

Lendio’s involvement in PPP:

• More than 200,000 PPP loans facilitated
• $10+ billion in PPP loan dollars
• 2.8 million U.S. jobs impacted
• Average PPP loan size: $52,000

 

 

 

 

After PPP: Funding for Small Businesses Beyond the Paycheck Protection Program

While the PPP loan program has officially stopped accepting loan applications, information and financial documents used during the application process may also help small businesses seeking funding for bounce-back initiatives and to fuel growth today. 

See your current financing options.

 

PPP Loan FAQs:

Is a PPP loan free money?

Yes and no. PPP loans can be fully forgiven, but businesses must apply for loan forgiveness within 24 weeks of receiving the loan. If they do not apply (or spend the funds on non-eligible business activities), they will need to repay the full loan amount. 

What qualifies you for a PPP loan?

Any small business with 500 or fewer employees may be eligible, including sole proprietors, independent contractors, and self-employed individuals. Businesses must be operational before February 15, 2020, and, if applying for a second-draw loan, have used up the previous loan funds and demonstrated a 25% or greater reduction in gross revenue. 

Is the PPP coming back in 2022?

No. Applications closed on May 31, 2021, and Congress is unlikely to pass another round of PPP funding this year. 

Can I get a PPP loan in 2022?

Unfortunately no. Because eligibility for the program ended in May of 2021, no new applications can be submitted for a PPP loan in 2022. 

How much can you get from a PPP loan?

First-time borrowers could request a maximum amount of 2.5 times the average monthly 2019 payroll (including insurance costs). 

Second-draw borrowers could request a maximum loan of 2.5 times the average monthly payroll costs (for 2019 or 2020) up to $2 million. 

The SBA also provided a breakdown for calculating loans based on business type.

What is the deadline for PPP forgiveness? 

The deadlines for PPP loan forgiveness are based on when the business applied for the loan and when it received the funds. A borrower can apply for forgiveness after all the loan proceeds have been used on eligible expenditures.

PPP loans have a maturity date of 8 to 24 weeks. The deadline for the forgiveness application is 10 months after the last day of the covered period.

If the borrower does not apply for forgiveness within the deadline, PPP loan payments will no longer be deferred, and the borrower must begin making payments to the PPP lender.

Is PPP loan forgiveness taxable?

No. A PPP loan is not considered taxable income. However, the IRS does warn that improperly forgiven loans (based on omissions or misrepresentations in the application) are taxable and should be included as reported income. 

More Resource about PPP

Check out these other resources to learn more about PPP and your small business options. 

PPP loans for small business options

PPP loan forgiveness