When the pandemic first hit in 2020, small businesses were inconvenienced. Small businesses started letting go of their employees, struggling to keep their doors open and keeping their lights on. The small business administration sought a way out.
They partnered with the US Treasury Department and launched the Paycheck Protection Program in April 2020. The program loans were offered to approved businesses through lenders to give small incentives to keep their employees throughout the pandemic.
According to Lantern by SoFi, “PPP loans may be forgivable if they meet certain qualifications pertaining to how funds are used.” The terms were that the loan was spent to pay the employees and keep the workforce. In the first round of the program, about 85% of the qualified recipients received $150,000 or less.
After the program was closed in august 2020, many businesses continued to struggle. Fortunately, Congress passed the 2021 Coronavirus Response and Relief Supplemental Appropriations Act, which saw a massive $659 billion set aside to help small businesses maintain their workforce.
Who Can Get the PPP Loan?
Since Congress approved a new round of funding, many people are asking who can qualify to get a PPP loan. According to PPP loan data, real estate and construction businesses made up the largest percentage of PPP applicants. If your business did not receive the first round of funding and it needs it, the government is encouraging you to apply for the loan if you are not enrolled.
If your business received a loan in the first round, you can also apply for a new loan if your business is not out of the woods yet. Seasonal businesses like hotels and restaurants can receive additional benefits. In the second round, the businesses can receive a PPP loan 3.5 times more than that in the first round of PPP loans. The multiplier in the first round of loans was 2.5.
PPP loans are meant for only small businesses and not any publicly traded businesses. The SBA has defined these small businesses as the ones that have not more than 500 employees or companies with 300 employees or less looking for a second round of funding.
Congress has defined the small businesses that qualify for PPP loans at this round of the program. In the first round, there were many questions about the businesses that qualify. The businesses that qualify with their structures include:
- Private nonprofit businesses
- Faith-based organizations
- Tribal groups
- Veteran groups
- 501(c)(3) nonprofits
- 501(c)(6) organizations
- Independent contractors
What Your Small Business Needs to Qualify
Beyond your business structure, a few key details will be asked for qualifying for the loan.
- How much you incur in payroll and proof. (IRS form 941)
- Basic business information like name tax ID number, and address
- Some background information about your business including the business owner, any existing loans, and citizenship information.
- Business Bank statements
- Your driver’s license
- A nullified business check for your account information.
If you are applying for the second round of funding, your business must not have more than 300 employees. You should have also used up all the money you received in the first loan. You must also prove that your business has suffered a 25% revenue loss in any quarter of 2020 if compared to the same quarter in 2019
Danis Woods in Businessman, investment banker and stock exchange traders. On the same time he loves writing financial blogs to shed lights on different aspects that new and existing businessman are not aware of.