Low Interest Rate

1% fixed rate APR for the life of the loan

Payment Deferral

Payments deferred for 6 months.

Loan Forgiveness

On qualified uses like payroll, mortgage interest, rent, and utilities.

Paycheck Protection Program (PPP) Loans

Small businesses need a lifeline right now, and the federal government has stepped up to offer Paycheck Protection Program loans. Because of the pared-down SBA requirements for PPP loans, more small businesses will qualify for the SBA coronavirus loans than previous SBA loan options.

Paycheck Protection Program Loan Requirements

The requirements for PPP loans are incredibly simple. Your business only needs to hit 2 criteria:

What Paycheck Protection Program Loans Are For

PPP loans will help small businesses, including sole proprietors and independent contractors, and private nonprofits maintain payrolls and continue necessary payroll-related payments like rent and utilities. The full allowable uses of the loan are:

How Paycheck Protection Program Loans Are Calculated

PPP loans are calculated based on 2.5 times your business’s (or organization’s) monthly payroll costs. Payroll costs include compensation, as outlined above, along with other payroll-related costs like retirement payments, state and local taxes on payroll, payment for vacation or paid leave, group healthcare costs, and allowances for separation or dismissal. For a comprehensive outline of what is used and excluded, you can visit our PPP calculator, where you can also get an estimate on your potential PPP loan size.

Are SBA PPP Loans the Same as Disaster Loans?

PPP loans differ from Economic Injury and Disaster Loans (EIDLs). PPP loans are available to all US businesses based on the requirements above.

EIDLs are also available for small businesses in designated areas (right now that’s classified as all US states and territories) that have suffered an economic hit because of the COVID-19 pandemic, though the requirements are more stringent. Unlike PPPs, EIDLs/disaster loans must be repaid in full.

Do You Have to Prove Economic Injury?

With an EIDL, or disaster loan, small businesses need to prove they’ve experienced “substantial economic injury.” Unlike disaster loans, PPP loans under the CARES Act are funded with the presumption that your business has experienced the negative impact of COVID-19. They are not tied directly to economic losses suffered as a result of the disaster.

Paycheck Protection Program Forgiveness

PPP loans are eligible to be forgiven, up to 100% of the loan principal if the funds are used appropriately. Here’s what you need to know about what qualifies, how to apply, and how to calculate your potential PPP loan forgiveness.

Costs and Payments Eligible for Forgiveness

Any costs incurred and payments made in the first 8 weeks of the loan, following the origination date, under these set categories are eligible for forgiveness: Payroll costs (as listed above) Mortgage interest payments (but not payments on the principal) Rent Utilities

Calculating Your PPP Loan Forgiveness Amount

Because the SBA expects a high number of applicants for PPP loans, no more than 25% of the forgiven amount can be for non-payroll costs (i.e., mortgage interest, rent, and utilities). If your business has laid off employees, that will also affect how much your loan can be forgiven. The total effect on your PPP loan’s forgiveness-eligibility depends on some complicated math that your funding manager can walk you through to give you the specific answer for your business.

How to Apply for PPP Loan Forgiveness

To receive loan forgiveness, a borrower must apply to their lender with documents verifying payments (on mortgage interest, rent, and utilities) and payroll (number of employees, pay rates, including IRS payroll tax filings and state income, payroll, and unemployment insurance filings). These documents must be certified from a representative of the business that the information is true.

When Do Paycheck Protection Program Loan Payments Start?

For portions of the loan that are not forgiven, payments are deferred for the first 6 months. But keep in mind that interest will accrue during the 6-month deferral period.

Can You Get a PPP Loan If You Have Other Loans?

Yes, you can qualify for a PPP loan even if you already have other loans, including other SBA loans. You cannot use the funds from PPP loans and other loans for duplicate use at the same time. For example, if you use a disaster loan (EIDL or loan advance) to pay your business’s May rent, you cannot also apply for a PPP loan to cover May rent.