As you prepare for a PPP loan, you may have questions about what to include in your application. This article will help you answer those questions and ensure your application succeeds.
A recent NPR analysis found that about one-third of unforgiven PPP, loans come from borrowers who are sole proprietors or businesses whose loans were processed by financial technology companies, known as fintech.
Know Your Lender
Before you start your PPP loan application, know your lender. Each lender has its requirements, and you should conduct adequate due diligence before signing on. You can find out what your lender expects from you by requesting their PPP fact sheet and checking out their online resources.
The most important thing is to understand how the PPP program works and how to do business with your lender. Your lender will likely be more than happy to explain the process for applying for forgiveness, which is based on maintaining or quickly rehiring employees and spending at least 60% of your funds on payroll costs (including benefits).
For second-draw loans, borrowers must show revenue loss before receiving 100% loan forgiveness.
Know Your Business
Before applying for a PPP loan, knowing your business is important. This will ensure you have the information and documentation necessary to complete your application. This will also help you understand whether or not you’re eligible for a PPP loan and how much you can borrow.
These loans help businesses survive the COVID-19 pandemic without cutting their payroll or paying employees less. To qualify, your business must have fewer than 300 employees, and you must have experienced a 25% reduction in gross revenue during at least one quarter of the year.
Know What You Need
Before you get started on your PPP loan application, make sure you know what you need. You want to save time applying for funding you won’t be able to use. The best way to find out is by talking with your lender.
They can tell you if you are eligible and what you can offer. You can also ask them if they will delay your loan disbursement date. This is only on a case-by-case basis, however.
Know What You Can Offer
Whether you are a first-time PPP borrower or are an experienced business owner, knowing what you can offer is key to a successful PPP loan application. This includes having access to all the necessary tax documents (at least two years’ worth) and accounting reports that show how you achieved your total loan amount.
Getting your payroll costs and cash flow forecast together now will save you time. It also means you’ll be ready to explain why you need the loan in your PPP loan application.
Don’t Be Shy
If you’re a self-employed business owner, don’t hesitate to submit your PPP loan application. This is your livelihood, and it’s important to communicate with your lender and ask questions promptly.
The PPP was a federal program that provided loans to small businesses during COVID-19 to keep their employees on the payroll. Those businesses could then use those funds to cover payroll expenses, insurance premiums, and employee salaries.
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