The coronavirus pandemic has sent business owners reeling as a result of the economic devastation that shelter-in-place and social distancing orders have caused. Although these medically necessary restrictions have protected millions from infection, they have also left many without the ability to earn revenue. Business owners have looked to the Paycheck Protection Program (PPP) for assistance, but that well ran dry at the very beginning of the pandemic. Now, the program is reopening, giving those same establishments a second chance at funding. If you’re still in need of financial assistance, here’s a quick guide to applying for the PPP loan provided by the 401k Savings Plan provider, Ubiquity.
What to Know About the Paycheck Protection Program Loan
With a PPP loan, business owners can take out an exceptionally large amount of money to cover their business expenses and interrupted revenue streams during the coronavirus pandemic. (Borrowers can take a maximum of $10 million, or whatever amounts to 2.5 times the business’s monthly payroll.)
It is especially attractive to those suffering as a direct result of the coronavirus pandemic, as the funds do not have to be repaid like traditional loans. That is, under the condition that the funds are used for any of the following:
- Salary and wages
- Paid vacation
- Family leave
- State and/or local taxes
This loan could provide incredible support for your business during the shutdown. The repayment exception will also relieve the burden of repayment as you gain your footing upon reopening, strengthening your business even further.
How to Apply for a PPP Loan
There are many avenues through which you can apply for a PPP loan. The best place to search first, however, is via any existing relationships you may have with lenders (especially if those lenders are recognized as credit unions or if they are federally insured). Take advantage of such established relationships, as many lenders are exclusively considering applications of existing customers during this time. If you are without an existing relationship, do not worry. Below are a few examples of institutions considering new applicants:
- Harvest Small Business Finance
- The Loan Source
Use the Small Business Administrations (SBA’s) lender search tool to choose the lender that is best for you. When you’re ready to apply, visit the SBA website to fill out a PPP loan application. Upon approval, you can expect your funds to be disbursed within ten days (most borrowers have experienced disbursement within five days, however). Keep the following details in mind on how to qualify for forgiveness upon receipt of your disbursement:
- You must use at least 75% of the funds on the expenses listed above. (Initiate these payments as soon as you receive the money.)
- Do not exceed $3,846.15 in payments to a single employee or yourself within two weeks of receipt of the PPP funds.
- Do not fire any employees within the eight weeks following your disbursement.
- In the eight weeks following the receipt of your loan disbursement, convert 1099 workers to W2 workers.
A PPP loan could greatly assist you and your employees during this difficult time. Research the lenders available to you and visit the SBA website to apply for your financial assistance and keep your business afloat and your employees cared for, as we endure the ongoing pandemic.