How To Apply For New PPP Loan: Paycheck Protection Program Explained
Are you looking for answers on whether or not the free PPP loan that were issued to small businesses still exist? The Paycheck Protection Program ended on May 31st, 2021.
PPP existed for small business entities to get low-interest loans to pay off internal costs such as payrolls, utilities, and rent.
The Paycheck Protection Program was a way for businesses to support their workforce during the pandemic. This program no longer exists and was discontinued on May 31.
If you didn’t know about the advantages and also why PPP was offered for small businesses, here are some commonly asked questions and answers:
Who is Eligible to get a PPP Loan?
The first determination of being eligible for a new PPP loan was that the borrower or small business had to be in business from or before February 15, 2020.
This was important for lenders because the program was designed as a relief for small businesses that faced financial hardship amid the pandemic.
Freelancers, gig workers, independent contractors, sole traders, and self-employed workers among nonprofit organizations were eligible to get a PPP loan.
The program also gave grants to organizations in the entertainment industry that lost over 25% in revenue.
Most small businesses with under 10 employees had been eligible for access to up to $150,000 in funding during the program. Many private lenders came on board to help small businesses acquire this funding so they could continue employment.
How Much Money can you get from PPP?
How much is the maximum that one can get from the Paycheck Protection Program? The most money you can get as a first-time PPP loan borrow is 2.5 times the amount of your monthly payroll cost. For example, if your average salary payout for the last 12 months was 300,000, you can borrow up to $750,000 in a PPP loan.
For second-time PPP borrowers, can get a maximum of 2 million dollars while using the same formula. Restaurants and other fast-food chains can borrow up to 3.5 times of their monthly payroll.
The Small Business Application (SBA) started using this formula just after March 5 when the program was already rolled out. This means, many small businesses that applied, didn’t receive as much as they should.
How To Apply for a PPP loan?
The first step in getting a loan as a small business is through the SBA website where you will have a couple of options. With the PPP loans no longer existing, you can choose other types of loans such as the 7a, 504, or microloans.
Previous borrowers are eligible for PPP loan forgiveness that had received a loan of less than $150,000. With the forgiveness program, interest used to pay for business expenditures such as salaries, utilities, and rent will be waived after 8-24 weeks in the program.
How to apply for New PPP Loan Forgiveness
Starting March 13th, 2024, all borrowers can use the Small Business Application portal to apply for a PPP Loan forgiveness.
You also have the option to work with lenders directly that accept forgiveness applications.
For more information and ways to apply for the new PPP loan forgiveness process, visit the SBA page using this link.
FAQ: What is the Paycheck Protection Program?
The Paycheck Protection Program, initiated under the CARES Act on March 27, 2020, aims to aid small businesses in retaining employees amid the economic challenges of the pandemic by offering forgivable loans.
PPP loans are guaranteed by the SBA and issued through banks and financial institutions. The program’s first round commenced on April 3, quickly exhausting its initial $349 billion funding. An additional $310 billion was allocated in late April, with application deadlines closing on August 8.
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