The Paycheck Protection Program: Where It Stands Now and How to Apply for a Loan

Justin Biel, Contributing Editor Oracle NetSuite and Grow Wire

April 24, 2020

On Friday, April 24, President Trump signed a bill giving $484 billion in aid to small businesses(opens in new tab), with an additional $310 allocated to the Paycheck Protection Program (PPP)(opens in new tab). This means that the loan program will open again after a recent stall, replenished with funds to fill pending loan applications and possibly fund new applications.

The new injection of funds can act as a lifeline for another group of small businesses who missed getting PPP loans processed while the program was in operation from April 3-16.

The program’s first, $350 billion wave of funding resulted in the processing of 1.6 million loans. This round of funding is smaller, meaning the majority of the country’s 30 million small businesses will remain without PPP loans.

The Treasury Department has also issued new guidance(opens in new tab) aimed at some PPP loan recipients — namely large, public companies that accessed millions of PPP dollars — to prove they need loans to continue operations. The new guidelines will result in some companies returning funds to the program(opens in new tab), however, the ultimate amount is unknown.

What if I’ve already applied for a loan through the Paycheck Protection Program but haven’t gotten money yet? 

In the PPP, financial institutions like private banks accept loan applications(opens in new tab). However, the federal government’s Small Business Administration (SBA) must approve your application before your bank hands over the cash, explains the Washington Post.

The SBA stopped processing loan applications when the PPP ran out of funds on April 16. It will resume processing them on April 27(opens in new tab), per Tweets from SBA leadership.

If you already applied for a PPP loan, hang tight. Unless you want to submit additional loan applications through new lenders, you don’t need to take further action. Your lender (i.e. your bank) will contact you with status updates on your loan.

As of April 16 when the program shut down, banks had hundreds of thousands of loan applications(opens in new tab) still pending, Politico reports. One large bank told CBS it had tens of thousands awaiting SBA approval(opens in new tab).

Can I file a new application for a Paycheck Protection Program loan right now?

Yes. Businesses applying for the first time should contact lenders immediately and submit applications. (Note, however, that not all banks are accepting applications right now.)

Similar to the previous PPP allocation, funds will be distributed on a first-come, first-serve basis and will go quickly.

Pro Tip: There is nothing to stop businesses from applying for the PPP through multiple lenders. Many(opens in new tab) news outlets(opens in new tab) report that small businesses have had the most success getting loans processed and funded after applying through regional or community banks vs. large ones.

Banks and lenders are handling new applications on a case-by-case basis. Some lenders have paused applications due to a backlog, but others are still accepting new applicants.

Here’s the status of national banks’ application programs. (Note that many are only accepting applications from folks who already bank with them.)

How likely am I to get a loan?

More often than not, we hear stories from businesses who haven’t seen their money yet.

“... Most borrowers are still waiting for those loans to be funded(opens in new tab) — and for money to even show up in their accounts,” CBS reported on April 16, as the SBA stopped processing applications.

The government hasn’t reported(opens in new tab) a number, but stories from both banks and business owners suggest a relatively small number of loan applicants have actually gotten their cash, per the Washington Post.

Is this lack of loans hurting other businesses like it’s hurting mine?

If you’re feeling frustrated and your business is strapped while you wait for a loan, you’re not alone.

One hotelier told CBS that, since filing multiple loan applications for his various properties, just “a small fraction”(opens in new tab) of the applications have been approved, and none are funded. The owner of three hair salons in the Carolinas got approved for a $107,000 loan(opens in new tab) but already had to lay off all of his employees.

Some companies have had success, however. Yahoo Finance told the stories of four businesses(opens in new tab) that have received PPP loans -- ranging from $83,000 to $201,0000 -- and noted that each applied at a small, local bank vs. a larger institution.

Conversations on Twitter(opens in new tab) were hopeful on Friday, with business leaders offering resources(opens in new tab) to help others(opens in new tab) through the application process.

If the Paycheck Protection Program doesn’t come through for me, where else can I get a loan?

The federal government doesn’t seem like the best source right now. We recommend consulting our rundown of all resources(opens in new tab), including loans and grants from state and city governments, nonprofits and private companies.

What is the Paycheck Protection Program?

Under The CARES Act(opens in new tab) signed into law on March 27, small businesses in the U.S. have access to $350 billion in loans(opens in new tab) under the Paycheck Protection Program (PPP)(opens in new tab), a new federal loan program designed to help companies and their employees sustain the economic challenges of COVID-19.

The PPP provides low-interest, federally-backed cash-flow assistance in the form of loans to small businesses in the U.S. and its territories. Some important details:

The government will fully forgive the loans “if all employees are kept on the payroll(opens in new tab) for eight weeks and the money is used for payroll, rent, mortgage interest, or utilities,” says the SBA. In a later note, the SBA added that 75% of the forgiven amount(opens in new tab) must have been used for payroll.

In the event your business does end up being required to repay a portion of its loan, you can get a deferral on loan repayments(opens in new tab) for a minimum of six months and up to a maximum of one year, per The Tax Foundation.

Businesses with under 500 employees, which include sole proprietorships(opens in new tab), independent contractors and others, can apply for PPP loans if their business was or is affected due to COVID-19(opens in new tab) between Feb. 15, 2020 and June 30, 2020.

Some of our favorite sources for more basics on PPP loans:

The SBA’s overview of the Payment Protection Program(opens in new tab)

Fast Company’s guide to the Payment Protection Program(opens in new tab)

Who is eligible for Paycheck Protection Program loans?

Here are the general eligibility requirements to apply for a PPP loan:

  • A business or nonprofit with under 500 employees, or one that meets the SBA’s size standards(opens in new tab) for a small business
  • An individual who operates as a sole proprietor, independent contractor or is self-employed who regularly carries on a trade or business
  • Tribal business(opens in new tab) that meets SBA size standards

 Special additions to the eligibility requirements:

What can I use the loan for?

The loan can be used for the following items:

  • Payroll, including salaries, commissions or similar compensations
  • Continuing health care benefits
  • Mortgage interest payments
  • Rent
  • Utilities
  • Interest on any other debt obligations

How much money can I get from a Paycheck Protection Program loan?

The size of your potential loan depends on payroll costs. Eligible businesses will get loans of up to 2.5 times their average monthly payroll costs(opens in new tab) in 2019, up to $10 million(opens in new tab). For example, if your payroll costs in 2019 were $10,000 per month, you will get a $25,000 loan (10,000 x 2.5).

There are several online PPP loan calculators(opens in new tab) that help businesses define estimated loan totals and forgiveness.

When and where do I apply?

Aside from the national banks mentioned above, you can file an application with other of the program’s certified lenders, which include local banks(opens in new tab) and other lenders who process SBA 7(a) loans(opens in new tab).

Because most large banks are only accepting applications from folks who currently bank with them at this point, we suggest applying for a PPP loan through the firm you usually bank with. You can also visit the SBA’s site to find eligible PPP lenders(opens in new tab) in your area or use this listing of local lenders(opens in new tab) that often process SBA 7(a) loans. To determine how to submit your loan application at a local lender, check their website or call them up.

What information do I need to apply?

During the application process with your PPP lender, you’ll need to fill out(opens in new tab) the Paycheck Protection Program Borrower Application Form(opens in new tab).

The simple form should take less than 20 minutes to complete, as long as you have all the required information ready. Here’s what you need:

 I. General info

 II. Payroll Calculation

  • Average monthly payroll
  • Number of employees

To see what applies as an eligible payroll expense, review this breakdown(opens in new tab) from Tax Foundation, a leading independent tax policy nonprofit. 

For more helpful information from the NetSuite Blog and our friends at Brainyard(opens in new tab) and the Grow Wire(opens in new tab), visit the Business Now Resource Guide(opens in new tab).

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