In 2021, businesses in the United States of America can apply for PPP loans to fund their businesses. However, what are the eligibility requirements? what does the loan cover and where can you apply for the PPP loans from? Read on and find out more about PPP Loans.
After the covid-19 pandemic hit businesses, the President of the United States signed into law the CARES Act on March 27, 2020, which enabled the government to avail $350 billion for PPP loans. This was followed by an additional injection of $320 billion to the PPP loan kitty by the US Senate in May 2020.
PPP or Paycheck Protection Program is aimed at helping small businesses to continue with their operations and meet payroll costs at this time when the pandemic hit businesses hard. Remember that PPP advance is just for helping businesses, partnerships, and independent contractors to continue operating after the serious revenue loss caused by Covid -19 disruptions.
From When, and Who Can Apply?
As of April 3, 2020, sole proprietorship and small businesses can apply for loans to help them cover their payroll and related expenses through US Small Business Administration lenders.
As of April 10, 2020, self-employed persons and independent contractors can make an application for these loans to cover their payroll and related expenses. Enterprises that include veteran organizations, sole proprietorships, independent contractors, self-employed persons, and businesses in certain industries with no more than 500 employees qualify for the funding.
PPP Loans Application Requirements
If applying via your everyday lender or bank, you should reach out to them for detailed instructions about the specific material and requirements which they require to complete the application. If you cannot apply through your bank or lender, you can apply on SBA.com®. Upon receipt of your application, the request will get passed to SBAs partners. Then you will be required to avail of some additional documentation and complete your loan application at the partner’s platform.
Second-draw PPP loans
Borrowers under this category may be eligible for a loan of up to $2 million if they meet the following requirements:
- Has not more than 300 employees
- Will use all the amount of the PPP loan before the second PPP advances are dispatched to the borrowers.
- The business suffered a revenue reduction of more than 25% in 2020 when compared to 2019.
First-draw PPP loans
These loans are available to individuals or businesses that were already operating by Feb. 5, 2020. The applicants should be from any of these groups:
- Businesses with not more than 500 employees are eligible for the SBA 7(a) loans.
- Churches and other nonprofits
- Independent contractors, sole proprietorships
- Foodservice operations
- Business leagues such as visitors bureaus and chamber of commerce
How much is the loan amount?
First and second-time applicants of PPP loans receive loans that are 2.5 times their monthly payroll costs. However, hotels and other related establishments can receive 3.5 times of their average monthly payroll costs on the second PPP loan. Depending on their eligibility, a business may borrow up to $2 million.
