You have another opportunity to apply for a Paycheck Protection Program (PPP) loan. The initial $350 billion of funding ran out within a matter of weeks. The program reopened Monday, April 27, but the additional money appropriated will not last long either, given the backlog of applications and continued interest in the program.
What makes PPP loans the most attractive option on the market is the fact that you can take out a hefty sum (2.5x your monthly payroll up to $10 million). In addition, you do not have to repay this money, as long as you use the funds for salary, wages, commissions, tips, vacation pay, family leave, and state/local taxes. Continue reading to find out how you can apply.
Choose where to apply for a PPP loan
If you have an existing relationship with a lender, such as a federally-insured bank or credit union, that’s the best place to start. Many national institutions, from Live Oak Bank and JP Morgan Chase to Bank of America and Regents Bank, are only accepting applications from existing customers.
If you do not have an existing relationship with a regional bank or credit union, you may be able to apply through:
- Centerstone SBA Lending
- Funding Circle
- Harvest Small Business Finance
- Intuit/Quickbooks Capital
- Ready Capital
- Square Capital
- The Loan Source
- Velocity SBA
To avoid scams, be sure you’re working through an approved lender. The Small Business Administration’s lender search tool can tell you whether they are one of the 1,800 participating lenders authorized to administer the program. The application deadline is June 30, 2020, if funding does not run out in the meantime.
Fill out a PPP application
You can get the application at your lender’s office or apply online in some cases. The Small Business Administration also lets you download and fill out a PPP form on their website.
The processing time
The program requires lenders to disburse the funds within 10 days of approval, but most small businesses report a one to five-day loan processing time. While you are waiting, you may consider other options like Economic Injury Disaster Loans (EIDL) or 401(k) loans.
Know the rules for PPP forgiveness
If you are spending your PPP loan on approved expenses, the loan debt will be forgiven.
- Use all (or at least 75%) of the funds on wages, benefits, tips, commissions, paid leave, and local taxes.
- Convert 1099 workers to W2 workers for the next eight weeks.
- Do not pay any one employee (including yourself) over $3,846.15 in a two-week period.
- Start payments the day you receive the money.
- Do not lay off workers during the next eight weeks.
Keep in mind any borrowed money that is not forgiven will be converted into a very low-interest loan. Forgiveness will be approved at the end of the eight-week period following receipt of your loan, after you have requested this from your lender in writing. Your request must contain documentation of the number of full-time employees, pay rates, mortgage, or lease payments, as well as utility payments. Your lender has 60 days to reply to your request.
Contact Ubiquity if you have any questions about how the coronavirus crisis affects your 401(k) retirement savings.