SBA Paycheck Protection Program And How To Get Stimulus Money
SBA Paycheck Protection Program is getting funds from the $2 trillion stimulus package signed into law are starting to be disbursed by the federal government. Small businesses are eligible for loans that can get converted into grants if certain requirements are met. Businesses with fewer than 500 employees, 501(c)(3) organizations with under 500 employees, certain veteran organizations, freelancers, sole proprietors and gig workers are all eligible for the Paycheck Protection Program (PPP) loans. The PPP loans are different from the disaster loans. The disaster loans, which are for those in a state that has declared a state of emergency, have a 3.75% interest rate for businesses and 2.75% rate for nonprofits and will have to be paid back. If you apply for these loans, you are eligible to apply for a $10,000 grant that you would receive three days after applying. More details are available here. The PPP loans are backed by the SBA but will be provided by lenders. Interest rates cannot be higher than 4% and the maximum loan amount is $10 million. Lenders that are already part of the SBA’s 7(a) program are also qualified to make these loans. You can find a list of those lenders below. Business owners and sole proprietors can begin applying for the PPP loans on April 3, and freelancers and individual contractors can apply on April 10, according to the U.S. Chamber of Commerce. PPP loans can be forgiven if the funds are used for payroll expenses, mortgage payments, or rent and utility costs within eight weeks of receiving the loan. The forgiveness amount depends upon your headcount and can be reduced or increased based on layoffs or hiring. However, the SBA states “due to likely high subscription, it is anticipated that not more than 25% of the forgiven amount may be for non-payroll costs.
1) Paycheck Protection Program: SBA loan of up to 2.5x your monthly payroll costs, forgivable if primarily applied to maintaining your staff (can also be applied to rent and other overhead expenses to a lesser extent)
2) Small Business Debt Relief Program: Covers existing and new SBA loan payments for 6 months
3) Economic Injury Disaster Loans: Up to $10,000 advance for businesses harmed by COVID-19
Paycheck Protection Program How To Apply
In this video we are talking about the paycheck protection program how to apply for the loan. The paycheck protection program can be a forgivable loan if you use it for the designated expenses. We are also doing an application walk-through step by step on how to prepare. Watch this step-by-step video now.
SBA Paycheck Protection Program Loan Information
The Paycheck Protection Program is a loan designed to provide a direct incentive for small businesses to keep their workers on the payroll.
SBA will forgive loans if all employees are kept on the payroll for eight weeks and the money is used for payroll, rent, mortgage interest, or utilities.
You can apply through any existing SBA 7(a) lender or through any federally insured depository institution, federally insured credit union, and Farm Credit System institution that is participating. Other regulated lenders will be available to make these loans once they are approved and enrolled in the program. You should consult with your local lender as to whether it is participating in the program.
Lenders may begin processing loan applications as soon as April 3, 2020. The Paycheck Protection Program will be available through June 30, 2020.
Who Can Apply For SBA Paycheck Protection Program
The following entities affected by Coronavirus (COVID-19) may be eligible:
Any small business concern that meets SBA’s size standards (either the industry based sized standard or the alternative size standard)
Any business, 501(c)(3) non-profit organization, 501(c)(19) veterans organization, or Tribal business concern (sec. 31(b)(2)(C) of the Small Business Act) with the greater of:
500 employees, or
That meets the SBA industry size standard if more than 500
Any business with a NAICS Code that begins with 72 (Accommodations and Food Services) that has more than one physical location and employs less than 500 per location
Sole proprietors, independent contractors, and self-employed persons
SBA Paycheck Protection Program Loan Details and Forgiveness
The loan will be fully forgiven if the funds are used for payroll costs, interest on mortgages, rent, and utilities (due to likely high subscription, at least 75% of the forgiven amount must have been used for payroll). Loan payments will also be deferred for six months. No collateral or personal guarantees are required. Neither the government nor lenders will charge small businesses any fees.
Forgiveness is based on the employer maintaining or quickly rehiring employees and maintaining salary levels. Forgiveness will be reduced if full-time headcount declines, or if salaries and wages decrease.
This loan has a maturity of 2 years and an interest rate of 1%.
If you wish to begin preparing your application, you can download a copy of the PPP borrower application form to see the information that will be requested from you when you apply with a lender. SBA loan process
SBA Paycheck Protection Program Loan Links
You Can Now Apply Online For Small Business Administration (SBA) Paycheck Protection Program.