* Application begins January 12 2021 and ends at March 31, 2021.
** Opens on an external website which will also test your eligibility for a PPP loan.
What You Need to Know About Paycheck Protection Program Loans
Why has it been Established? The Paycheck Protection Program has been set up to ensure that small businesses can continue to pay employees and cover costs during this unprecedented health crisis. For up to eight weeks, this program can be used to cover the entire cost of payroll and other eligible expenses.
Who is Eligible? All businesses – including small businesses, nonprofits, veterans organizations, Tribal business concerns, sole proprietorships, self-employed individuals, and independent contractors – with 500 or fewer employees can apply. Borrowers with 300 or fewer employees can apply for a second-draw of PPP funding in the third round of PPP financing launched in 20201.
In certain industries businesses can employ more than 500 members of staff and still meet the criteria if they meet the SBA’s size standards for those industries.
When is the Scheme Open? The paycheck protection program was initially set to run from April 3rd – June 30th 2020. The launch was delayed until April 6th and the original program was extended to August 8th. The latest round of PPP funding opened January 11th 2021 and is set to run until March 31st 2021.
How Can You Submit a PPP Loan Application?
You can apply through an established online lender or your local bank.
Thousands of banks, credit unions and online lenders are approved to make emergency Small Business Administration Loans.
If you meet certain criteria, all of your eligible expenses for up to 24 weeks will be 100% forgiven.
Loan size is up to $10 million (second-draw loans up to $2 million) and loans can be used to cover payroll, paid sick leave, insurance premiums, rent, utilities, and mortgage payments.
You are required to complete the Paycheck Protection Program loan application form with the required documentation and submit the application to an approved lender that is available to process your application by March 31st, 2021.
To apply for a Paycheck Protection Program Loan - Have the Following Documents Ready
All Applicants for a PPP Loan Need to Show the follow:
- Bank account and routing number
- Business start date
There are additional requirements as per below
Sole Proprietors and Self Employed
- 2019 IRS Form 1040-C if your business is a sole proprietorship
- 2019 IRS Form 1099-MISC if any independent contractors have been paid, not to exceed $100,000 for the year
Companies with employees
- 2019 IRS Form 941 for quarterly salary, wages, commissions, and tips
- 2019 IRS Form 944 same as 941, but annualized
- 2019 IRS Form 940 for any unemployment costs
- 2019 IRS Form W-3
- 2019 IRS Form 1099-MISC for any independent contractors paid, not to exceed $100,000 for the year
- 2019 IRS Form 1040-C if your business is a sole proprietorship
Monthly payroll statements which detail the following:
- Salary, wages, commissions, and tips if applicable (not exceeding $100,000 annually for each employee)
- Cost of vacation, parental, family, medical or sick leave of employees
- Cost of separation or dismissal of employees
- State & local taxes based on employee compensation
Reasoning for the Paycheck Protection Program and CARES Act
The coronavirus COVID-19 pandemic is affecting 220 countries with over 90 million people testing positive for the virus globally to date and around 25% of these or 23 million cases now confirmed in America (true Jan 11, 2021 – up to date statistics available here).
Small businesses in America are being impacted from Coronavirus in a variety of ways:
- Supply chain failure – especially those importing from overseas
- Exports/Imports are being held for clearance
- Fewer customers resulting from social distancing
- No foreign tourists
- Contracts are being cancelled due to panic
- Difficulty in employment
- Travel bans/restrictions/risks
The coronavirus pandemic is continuing to have a long and sustained impact on both major and developing economies around the world. US GDP for Q3 of 2020 rebounded at a 33.4% annualized rate but the economy remains 3.5% below its level at the end of 2019. With Q4 GDP numbers still to be released, the economy appears to have lost momentum, however, with the year drawing to an end amid raging new Covid-19 cases and reduced fiscal stimulus.
Part of the reason for higher US numbers are as a result of better testing capabilities of course but make no doubt about it, the US is the epicentre of COVID-19. The global impact alone would be enough to damage the US economy but given the huge volumes of coronavirus spreading in the US and slow pace of vaccine rollout, that’s why we’re seeing major US banks still cautions on their growth forecasts for the US economy in 2021.
These are truly unique times that nobody alive right now has ever experienced. It’s why we’re seeing such unprecedented moves by the US Government in granting what are in effect government small business loans that can be fully forgiven providing you prove you are using them on eligible business expenses.
Who is Eligible for Paycheck Protection SBA Loans?
Paycheck Protection Program Loan Forgiveness
You will be able to seek loan forgiveness through the SBA lender who provided you the loan. Such loan forgiveness requests for Paycheck Protection Program financing need to be made by enclosing the following documents.
- Number and wage of full time employees in this period who have been paid in full.
- Covered mortgage interest payments
- Covered rent payments
- Covered utilities payments
In order to seek PPP loan forgiveness you must prove that in this relevant period you have done all in your power to maintain employees and pay your bills.
Lenders will be forced to approve or disapprove such a request in a period of no more than 60 days.
The US treasury has announced that the SBA will be
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