How to Apply for the Payroll Protection Program (PPP)

It’s no secret that the COVID-19 pandemic has impacted businesses in a big way. To counteract its negative effects, the US Treasury started rolling out the Payroll Protection Program (PPP) last month (click the link here).

The PPP is part of the federal stimulus bills that includes a bipartisan $2 trillion economic relief plan that will offer help to millions of American small businesses that have been affected by the pandemic. The provisions offered will include cash grants, 10-year low-interest loans, and payments to offset payroll expenses, rent, utilities, and employee retention or rehiring. Any part of the loan that is used for these purposes within the first eight weeks of receiving the loan will be forgiven. Meaning you won’t have to pay that part back! 

The Basics of the Payroll Protection Program

Who is eligible for relief?

Nonprofit organizations and businesses with fewer than 500 workers are eligible for aid. This includes freelancers, sole proprietorships, and independent contractors. Larger companies within certain industries are also eligible. To be eligible, your business or organization has to have been in operation on February 15, 2020. 

How much am I eligible to borrow?

Companies can borrow up to two months of average monthly payroll expenses for last year plus an additional 25%, up to $10 million. Payroll expenses are defined as wages, salary, tips, employee benefits including health insurance, state and local taxes, and commissions. 

How do I apply?

You’re required to apply through a bank or other such lender so start by contacting one you and your business already have a relationship with. Many banks are limiting themselves to work with only existing business customers. The SBA does have a tool that allows you to search for nearby lenders, but again, they may not be taking new customers. 

Why is my bank saying there’s an issue with my application?

There have been some problems with getting the program up and running quickly. While the Treasury Department stated that applications would start on April 3, a week after the bill was signed into law, the department didn’t give lenders the information they needed until hours before the program started. As a result, many lenders are still developing their application systems. While yes, it may be frustrating, continue to work with your bank and stay up-to-date as the application process should be available shortly.

Will the money for the loans run out?

It probably will and it could happen quickly. The program has limited funding and works on a first-come-first-served basis. The Trump administration has said that they will ask Congress for more money if the aid runs out, but Congress will have the final say and this could take several more weeks. We say this to say that if you have not already, you should get in contact with your lender immediately.