On December 22, 2020 Congress passed the stimulus bill which provides for new Paycheck Protection Program loans and other small business relief. Read more about that legislation and apply for a PPP loan here.
On the morning of June 30, 2020 I received an email with an urgent question, “Is it too late to apply for a Paycheck Protection Program (PPP) loan?” At that moment, it was too late. That was the last date to get an approval number from the SBA and lenders had stopped taking applications in anticipation of that looming deadlines.
But less than 24 hours later that changed.
The House and Senate voted to extend the program until Aug. 8, 2020 and the President has signed it into law.
If you have been debating whether to take a PPP loan for your business, this gives you more time to collect documents, consider your options and apply if you believe it makes sense for your business. Approximately $130 billion in funds are still available to lend to small businesses.
As a reminder, PPP loans are a type of SBA 7(a) loan created by The CARES Act. Small businesses may receive a loan of 2.5 times average monthly payroll. Self-employed individuals, including independent contractors, can apply based on 2019 Schedule C net profit. The loan may be fully forgiven if the borrower spends the money properly. Broadly that means 60% or more must go toward payroll and up to 40% for other expenses such as utilities, mortgage interest and/or rent.
For many business owners, PPP has been a lifeline that has allowed them to pay employees (and themselves) and cover some essential bills during the downturn.
The recent PPP Flexibility Act made some substantial improvements to the program, dropping the threshold for spending on payroll from 75% to 60%, for example, and extending the time to rehire employees and avoid a reduction in forgiveness.
There are still many business owners and independent contractors who haven’t applied for or received PPP loans. For some, their business didn’t slow down until recently, making them unsure whether they would qualify. Others hadn’t completed their 2019 business tax returns and couldn’t figure out how to calculate how much they qualified for. And with news that some businesses were returning PPP loans, some were wary about applying themselves.
If you’ve considered applying for a Paycheck Protection Program loan, this may be your last chance. The good news for borrowers who apply now is that there is much more extensive guidance available than when the program first launched.
The following resources can help you understand how they work:
- Frequently Asked Questions About CARES Act Paycheck Protection Loans for Small Business
- Nav CARES Act SBA Loan Calculator
- Self-Employed: How To Apply For A Payroll Protection Program PPP Loan
- 7 Ways the Paycheck Protection Program Flexibility Act Can Help Your Business
Many lenders and big banks have stopped accepting new applications from small businesses and independent contractors. However, there are lenders that will continue to process and approve PPP applications. Nav will help connect small business owners to PPP paths by matching them to a PPP lender or agent.
How can I apply for the PPP loan and what’s the required eligibility status? Thanks
Here is our updated article on the PPP loans available in early 2021. If you are self-employed (including an independent contractor) and file Schedule C this article should help as well.
You can get started with your PPP application here. Nav will match you to lenders.
Gerri – great article, thanks for the info! Two questions, one on filing and a second on Nav’s application process:
Question 1: we’re a 2 member LLC filing as a partnership. We haven’t applied for anything until now. Does that mean that submitting a “first filing” application now would mean we’d be pulling from the initial pot of grants, with the ability to then file for a second PPP loan? Or did the first window close, meaning that any applications are now a first filing for the second round. I ask in part because I’m seeing multiple places won’t accept first time filers.
Question 2: We started business in Jan-2020 and plan to use the Jan-Feb 2020 period as our eligibility opportunity. That period also becomes our loan amount justification. The document that substantiates the eligibility and loan amount, would be the K-1 for our partnership, yet the 2020 K-1 can’t be submitted until 12-Feb. We just applied for the PPP loan through a large bank and our denial cited the 2020 K-1 issue. It’s ridiculous that loan amount is dependent on a document that legally can’t be created yet. Any insights? Does Nav’s application permit a draft 2020 K-1 for partnerships using the Jan-Feb 2020 eligibility period?
Huge thanks!
Thank you Brandon, though the more recent article on the new PPP loans is here if you want to check it out.
For the first question, I think the timing to get a first and second PPP loan before the deadline of end of March is going to be really tricky. The approval process at the SBA is slow right now and to get approved, then get your funding and use the funds (would most likely have to be an 8 week period as well) before the second loan is disbursed will be tough. You can, however, apply for a first-time PPP loan and there is still funding for those.
For question 2, I don’t know what our lending partners will require there but I’ll check. You are also welcome to contact our customer support team as well.
Gerri – thanks for the link and info!
I appreciate you looking into my second question. My case certainly isn’t unique, I suspect a lot of applicants of new businesses were denied for the same reason.
I’ll reach out to customer support!
Hi, we were a startup company just before covid 19 hit, is it possible for new companies to apply for ppp loans? We provide no human contact through robotic food retail.
Lisa – UPDATE 2/2/2021. PPP is currently open for new applications. Read more here.
Have you seen our video on start up financing?
Where can I still apply for a PPE or PPP LOAN. My business has suffered since the beginning of this pandemic and we
are struggling financially. Thanks
Hi Tim – PPP is currently closed to new applications unfortunately. The Economic Injury Disaster Loan (EIDL) program is still open for low-rate loans. You can apply at SBA.gov.
Hi I applied for the sba loan and was declined is there anything else I can do to keep my busines going
I’m so sorry to hear that. I’d recommend you contact your local Small Business Development Center and/or SCORE chapter to find out what’s available locally. Their services are free.
Will there be another extension to apply for a PPP loan, I didn’t get an application in by the August 8 deadline?
Congress is discussing an extension of PPP. You may want to contact your elected officials in Washington to share your concerns.
I have already received a small PPP loan that allowed me to keep my store operational and my staff paid with no layoffs. That small amount only went so far and ran out last Friday… the last payday. Am I able to apply again as sales have not yet recovered enough to support the business and staff? My only other option would be to begin cutting jobs.
So sorry to hear this. Unfortunately borrowers can only get one PPP loan. At the moment (Sept 3 2020) Congress is considering additional relief. I highly recommend you reach out to your Senators and Representative in Washington to let them know what your business is facing.
Dear
I have a question
The PPP is already closed ?
UPDATE 2/2/2021. PPP is currently open again through the end of March 2021. You can apply now. More information here.