The Paycheck Protection Program: How to Apply for a Loan

By Justin Biel, trends editor

Under The CARES Act signed into law on March 27, small businesses in the U.S. have access to $350 billion in loans under the Paycheck Protection Program (PPP), a new federal loan program designed to help companies and their employees sustain the economic challenges of COVID-19.

Below, we’ll give you an overview of the Paycheck Protection Program. We’ll explain the current status of the program, the eligibility requirements for your business and other important information and resources you’ll need to apply.

What is the Paycheck Protection Program?

The PPP provides low-interest, federally-backed cash-flow assistance in the form of loans to small businesses in the U.S. and its territories. Some important details:

The government will fully forgive the loans “if all employees are kept on the payroll for eight weeks and the money is used for payroll, rent, mortgage interest, or utilities,” says the Small Business Administration (SBA). “Forgiveness will be reduced if full-time headcount declines, or if salaries and wages decrease.”

In the event your business does end up being required to repay a portion of its loan, you can get a deferral on loan repayments for a minimum of six months and up to a maximum of one year, per The Tax Foundation.

Businesses with under 500 employees, which include sole proprietorships, independent contractors and others, can apply for PPP loans if their business was or is affected due to COVID-19 between Feb. 15, 2020 and June 30, 2020.

Some of our favorite sources for more basics on PPP loans:
The SBA’s overview of the Payment Protection Program
Fast Company’s guide to the Payment Protection Program

Who is eligible for Paycheck Protection Program loans?

Here are the general eligibility requirements to apply for a PPP loan:

–A business or nonprofit with under 500 employees, or one that meets the SBA’s size standards for a small business

–An individual who operates as a sole proprietor, independent contractor or is self-employed who regularly carries on a trade or business

–A Tribal business that meets SBA size standards

Special additions to the eligibility requirements:

–For accommodation and food service sector, organizations with the NAICS code NAICS 72 (i.e. hotels, restaurants, casinos, restaurants and bars), the “under 500 employee” rule is per location.

–Franchise operators or those that receive financial investment from a Small Business Investment Company (SBIC) are also eligible.

What can I use the loan for?

The loan can be used for the following items:

–Payroll, including salaries, commissions or similar compensations

–Continuing health care benefits

–Mortgage interest payments



–Interest of any other debt obligations

How much money can I get from a Paycheck Protection Program loan?

The size of your potential loan depends on payroll costs. Eligible businesses will get loans of up to 2.5 times their average monthly payroll costs in 2019, up to $10 million. For example, if your payroll costs in 2019 were $10,000 per month, you will get a $25,000 loan (10,000 x 2.5).

There are several online PPP loan calculators that help businesses define estimated loan totals and forgiveness.

When and where do I apply?

The program officially opened Friday, April 3, giving small businesses and sole proprietorships the ability to submit loan applications. Independent contractors and self-employed individuals can submit applications starting April 10.

You can file an application with the program’s certified lenders, which include both local and commercial banks and other lenders who process SBA 7(a) loans.

–Most banks we researched are only accepting applications from folks who currently bank with them at this point, likely due to high demand. Thus, we suggest applying for a PPP loan through the firm you usually bank with.

–You can also visit the SBA’s site to find eligible PPP lenders in your area or use this listing of local lenders that often process SBA 7(a) loans. Institutions on either of these lists should be ready to accept PPP loan applications now or very soon.

While the program is now live, not every lender is ready to take applications.

In other words: While you legally can apply for a loan now, your bank may not have a way for you to do that just yet. Many banks and lenders are still working to create the systems required to process the loans as of press time. Smaller banks seem to be having an easier time creating these systems, the Los Angeles Times reports.

Our scan of local lending institutions, along with the Twitterverse’s, confirms many lenders’ websites don’t have information about how to apply for a PPP loan just yet.

National banks that do not have application systems yet:

–Wells Fargo does not yet have a way for business owners to apply for a loan. The bank says it will update its PPP page when the system is ready. You must have an existing Wells Fargo Checking account to apply

–Citi doesn’t have a portal available yet, either, and will update its page when it does.

National banks that are accepting applications: 

–Bank of America launched its portal for loan applications on Friday morning. However, you’ll need to be an existing borrower through Bank of America, and some users are finding the system to be glitchy.

Chase Bank’s application page is live. To apply, you need to “have an existing Chase Business checking account.”

–US Bank has an inquiry form live, which it will use to kick off the loan process. While those who don’t currently bank with US Bank are allowed to apply, the group “encourages applicants to consider starting with a bank where they already do business.”

To determine how to submit your loan application at a local lender, check their website or call them up.

What information do I need to apply?

During the application process with your PPP lender, you’ll need to fill out the Paycheck Protection Program Borrower Application Form.

The simple form should take less than 20 minutes to complete, as long as you have all the required information ready. Here’s what you need:

I. General info
•Business legal name
•Business address
•Business taxpayer identification number (EIN, SSN)
•Primary contact (business phone and email address)
II. Payroll Calculation
•Average monthly payroll
•Number of employees

To see what applies as an eligible payroll expense, review this breakdown from Tax Foundation, a leading independent tax policy nonprofit.

When will I hear back about my loan application? 

Similar to the process for obtaining SBA Economic Disaster Loans, you’ll have to wait to hear from your lender for next steps after submitting your PPP loan application. Still, it’s best to get your application in early, as funds will be distributed on a first-come first-served basis.

👉 In the meantime, here are other sources of potential financial aid for your business, including SBA Disaster Loans — which you can receive in addition to a PPP loan, so long as you don’t use them for the same purpose.

🙋‍♀️As businesses face speed bumps due to the coronavirus, we’re here to help with the nitty-gritty — from finding financial relief to building a business continuity plan. Got a topic you’d like us to cover in an upcoming article? Let us know.

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