A Guide on the Paycheck Protection Program and How to Apply

The Paycheck Protection Program, the largest component of small business relief included in the $2 trillion CARES Act, is currently on pause after overwhelming demand due to the widespread impact of COVID-19. However, additional funding is in the works

While we await word on the government’s decision in terms of replenishing the loan program, let’s break down what the PPP is, who’s eligible to receive the funding, and how to apply so you can be prepared to receive a loan when it’s back open for business. 

Remember, this is not official legal advice. If you have questions or concerns about the guidelines of the PPP, it’s best to consult an attorney or financial advisor. 

What is the Paycheck Protection Program? 

The Paycheck Protection Program is a small business relief program aimed at providing businesses in the U.S. with eight weeks of funding assistance through federally guaranteed loans backed by the Small Business Administration. 

The forgivable loans program is tied to payroll costs and covers employees earning up to $100,000 per year. You can apply for 2.5 times your cost of payroll, and the funds are meant to be used for payroll and other operational expenses between the timeframe of February 15 and June 30, 2020. 

Who is eligible for a PPP loan?

Businesses with 500 or fewer employees, as well as non-profits, independent contractors, and the self-employed, who have been impacted by COVID-19 are eligible for the loan program.

To show you have experienced a negative impact, there is a section on your PPP application where you will need to certify that “current economic uncertainty makes the loan request necessary.” 

How can my loan be forgiven? 

According to the Treasury Department, the loan will be forgiven if it is used to cover payroll costs, mortgage interest, rent, and utility costs over the 8-week period. All employees and compensation levels must also be maintained. 

You’ll need to submit a request for loan forgiveness from your SBA lender. In the request, be sure to document: 

  • The number of full-time employees you have 
  • Pay rates for all employees
  • Your payments on an eligible mortgage or lease
  • Your utility payments 

Your lender will have 60 days to reply to your request, and the forgiveness won’t go into effect until the eight-week period after you receive your loan ends. 

Note: Any amount that is not forgiven will be treated as a two-year loan with a 1% fixed interest rate. All payments (principal, interest and fees) are deferred for 6 months; however, interest will continue to accrue over this period.

How do I apply? 

You can apply for the program through any lender approved by the SBA. While the SBA is not currently accepting new PPP loan applications, Homebase has partnered with Cross River Bank and Kabbage to receive and review applications in an effort to speed up the process once additional funding is approved. 

This means you can submit an application now by visiting the Kabbage PPP page. This service is completely free—there are no fees for applying through Homebase, Cross River Bank, or Kabbage.  

Before applying, take a look at Kabbage’s blog on required documents for the application to determine what you’ll need to gather. 

Remember, this is not official legal advice. If you have questions or concerns about the guidelines of the PPP, it’s best to consult an attorney or financial advisor. 

Shelbie Watts Shelbie Watts is the Content Marketing Manager for Homebase. She works to provide relevant, informative and engaging material to both local business owners and their employees, and hopes to make their lives easier one blog at a time.

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