The Paycheck Protection Program (PPP) is a fantastic opportunity for small businesses. Here’s what you need to know:
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It’s not just for paychecks: Despite the name, the PPP isn’t just about covering payroll. It’s more like a grant than a loan. If you apply correctly, you won’t have to pay it back.
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There’s money available: The PPP was established as part of the CARES Act to help small businesses weather the pandemic. It’s a $953-billion program run by the Small Business Administration (SBA) that started in 2020 and has been continued by the Biden administration.
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It’s not just a loan: The PPP provides low-interest loans to cover payroll and other costs like rent, mortgage interest, and utilities. If you maintain your employee count and wages, the loan may be partially or fully forgiven.
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Application process: The application process for the PPP ended on May 31, 2021, and it’s unclear if there will be another round.
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Who can apply?: Small businesses, self-employed individuals, and sole proprietors can apply. For the first draw, you must have no more than 500 employees. For the second draw, you must have no more than 300 employees.
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How to apply: The SBA and lenders can assist you with the application process. You’ll need to provide documentation to prove payroll costs, mortgage interest, rent amounts, and utility bills.
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Loan forgiveness: If you follow the SBA’s guidelines, you won’t have to pay back the money. The SBA has simplified the forgiveness process for loans less than $150,000.
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Choosing the right loan: First draw funds are running low but still available. If you’ve already received first draw funds, you need to apply for second draw funds.
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Finding a lender: You can apply through any SBA-approved lender, including local banks, credit unions, and online lenders.
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Eligibility: To be eligible, your business must have been in operation before February 15, 2020, and still be open.
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Using the loan: At least 60% of the loan must be used for payroll expenses. The rest can be used for mortgage interest, rent, utilities, and other specific costs.
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Loan terms: The interest rate on PPP loans is 1%. The repayment period is either 2 or 5 years, depending on when the funds were disbursed.
Remember, the PPP is a great opportunity for small businesses to get the financial help they need during these challenging times. Don’t miss out!
