7 Steps to Help You Apply for a PPP Loan
How to Apply for PPP Loan
PPP loans are designed to offer incentives for small-scale businesses to maintain their workers on the payroll. As a first-time applicant, you are eligible for the First Draw PPP loans. Afterward, you can qualify for a Second Draw PPP loan or PPP loan forgiveness. In this article, you will learn how to apply for a PPP loan.
Small Business Administration (SBA) offers counseling and training to sensitize potential applicants regarding the paycheck protection program (PPP). Below is a complete guide on how to apply for a PPP loan.
1. Confirm Loan Eligibility
The first thing to know about how to apply for a PPP loan is that business owners should stay up to date about their potential benefits and rights under the laws responding to economic turmoil experienced recently. The federal paycheck protection program (PPP) has been recently updated to cater to people in need. The PPP constitutes a loan backed by SBA in the U.S.
PPP loans aim at keeping the businesses running despite economic challenges. The eligibility requirements for non-profit PPP loans and small businesses under the American Rescue Plan Act of 2021 (ARPA) are similar to what was provided under CARES (Coronavirus Aid, Relief, and Economic Security Act).
Most non-profit organizations and small businesses are eligible for the loan if they have not more than 500 employees. However, some organizations can benefit from improved employee caps set by SBA for specific industries.
Visit the SBA website to find out if your business qualifies for any of the exceptions. Non-profit organizations and small businesses with several physical locations are also eligible as long as they have up to 500 employees. Qualifying for the loan does not mean that you can be forgiven under the program.
2. Assess Your Loan Application
After submitting your PPP loan request through sba.com, you will be directed to the application by the partners. Immediately after submitting the request, you will go straight to the PPP application page. You will be required to complete the application with the designated partner.
Upon confirmation of all the relevant information, the documentation will be submitted to the lender after the partner’s approval. After leaving the loan application portal, you can get back to the application. You will receive an email from the partner with the account information to access the loan application portal.
If you cannot find the email, reset the password to access the application portal. Your portal login information will remain the same whether you want to access the partner's portal directly through the partner or sba.com. After logging into the portal, you can edit the application and include any missing details before submission.
3. Confirm the Business Information
Confirm that everything in the business information section is complete with particular attention to:
- Type of business. Confirm that the type of business you have selected is correct because this can affect the documents you need to provide.
- Business address. The business address should be accurate in all aspects.
- The tax ID. Ensure that you have entered the nine-digit tax ID correctly. Also, check to ensure there are no errors and that the ID number constitutes nine digits.
- The number of employees. The employee count should be between 1 and 500.
- The loan amount. The loan amount applied for should be two and a half times the average monthly payroll expenses. Use the PPP loan calculator to confirm that there are no invalid entries.
4. Include Additional Information in the Application
On the business information page, complete all the fields required. The start date of the business should correspond to that of the Secretary of State filing. From the menu, indicate the industry you are in. If you cannot find your exact industry, select one that matches most. SBA cannot approve loans for businesses with no identifiable industries.
For Second Draw eligibility, you must prove a minimum of 25% revenue reduction. Enter the quarterly gross receipts and expenses for 2019 and 2020. Verify the accuracy of information before moving on to the next page. Your financial statement must fulfill the SBA requirements of proof and you must include this in the application.
5. Confirm Business Ownership and Additional Information
On the owner information page of the application, confirm the ownership percentage and ensure it is greater than zero. Add or confirm all required information including any additional owners. You must include the information for individuals with at least a 20% stake in the business.
Complete all the fields marked “Additional Owner,” including the date of birth of the owners and that of the applicant. A colored copy of the owner’s driver’s license is needed. You will be required to upload the copies of documents in the “Documents” section.
6. Upload the Documents
Upload all the required documents on the “Upload Your Documents” section of the application. Be sure to upload one document at a time. Confirm that whatever you have uploaded previously is correct and include any documents that may be missing to ensure the completeness of the PPP application.
If you do not have the driver’s license copies for all the owners with over 20% stake in the business, upload them. Double-check to ensure that the licenses are valid and that the front and back of the documents are captured.
All applicants are required to produce the bank statements and any other document to prove payroll expenses. Businesses should provide the payroll register for the last year, 941 quarterly tax filings and the 944 annual tax fillings. Other additional documents required include the Certificate of Existence, Articles of Association, State LLC agreement, and Certificate of Organization.
7. Check for Additional Application Requirements
Once your application is finalized by the partner, the partner will submit it to the lender marketplace. The lender can choose to accept or reject the application. If the lender accepts your application, you will be notified via email by the lender or the partner. Go through the emails carefully and follow the instructions to ensure you get the loan.
Upon approval, you will require to provide your lender a copy of the check and indicate where the funds should be directed. Lenders should fund the approval within 10 days after the completion of the underwriting process. If you contribute to delays in funds disbursement, the lender will have 20 days to disburse funds.
