How-to guide for applying for the Paycheck Protection Program

How-to guide for applying for the Paycheck Protection Program

On April 24, the President of the United States enacted the Paycheck Protection Program and Health Care Enhancement Act, appropriating an additional $321 billion for the Small Business Administration’s Paycheck Protection Program (PPP), established under the CARES Act. The PPP was established to provide forgivable loans to U.S. small businesses to cover payroll and operating expenses during the COVID-19 crisis. Applications to the program were closed on April 16 after the Small Business Administration allocated its initial $350 billion in funding. The SBA began accepting applications for this program again on Monday, April 27.

Step 1: Determine eligibility
All businesses – including nonprofits, veterans organizations, tribal business concerns, sole proprietorships and self-employed individuals – with fewer than 500 employees can apply. In some industries, businesses with more than 500 employees can apply if they meet applicable SBA “small business” employee-based size standards for those industries. SBA industry size standards can be found here.

Step 2: Find a lender
Borrowers can apply through any existing SBA lender or through any participating federally insured depository institution, federally insured credit union or Farm Credit System institution. A list of the 100 most active SBA 7(a) lenders can be found here.

Many lenders have already set up landing pages and lender-specific applications. PPP loans will be awarded on a first come, first served basis.

Step 3: Complete and submit the SBA’s official PPP application
Borrowers must complete the SBA’s Paycheck Protection Program application, found here, and submit the required documentation to an approved lender. Please note that in some cases, lenders may require you to fill out an additional, lender-specific application.

The deadline to apply for the PPP is June 30, 2020; however, the SBA is encouraging you to apply as quickly as you can. The SBA allocated the initial $350 billion in funding within two weeks, and the second wave of funding is expected to be exhausted faster due to pent-up demand.

Please note, borrowers are only allowed to take out one loan under this program.

Step 4: Request loan forgiveness
Borrowers can submit a request to the lender that is servicing the loan. The request must include documents that verify the number of full-time equivalent employees and pay rates, as well as the payments on eligible mortgage, lease and utility obligations. Borrowers must certify that the documents are true, and that the forgiveness amount was used to retain employees and make eligible mortgage, rent and utility payments. The lender must decide on the forgiveness request within 60 days of receiving the application for loan forgiveness.

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