How to Apply for a CARES Paycheck Protection Program Loan

The Paycheck Protection Program (“PPP”) authorizes up to $349 billion in forgivable loans to small businesses to pay their employees during the COVID-19 crisis.

The U.S. Small Business Administration (SBA) has created a website -  Coronavirus (COVID-19) Small Business Guidance and Loan Resources – to help answer questions small business owners may have.

Who Can Apply:

The following entities affected by Coronavirus (COVID-19) may be eligible:

  • Any small business concern that meets SBA’s size standards (either the industry based sized standard or the alternative size standard)
  • Any business, 501(c)(3) non-profit organization, 501(c)(19) Veterans organization, or Tribal business concern (sec. 31(b)(2)(C) of the Small Business Act) with the greater of:
    • 500 employees, or
    • That meets the SBA industry size standard if more than 500
  • Any business with a NAICS Code that begins with 72 (Accommodations and Food Services) that has more than one physical location and employs less than 500 per location
  • Sole proprietors, independent contractors, and self-employed persons

When to Apply – Now through June 30, 2020

  • Starting April 3, 2020, small businesses and sole proprietorships were able to apply for and receive loans to cover their payroll and other certain expenses through existing SBA lenders.
  • Starting April 10, 2020, independent contractors and self-employed individuals can apply for and receive loans to cover their payroll and other certain expenses through existing SBA lenders.

How to Apply

  • Go to the SBA Coronavirus Relief Programs Summary to understand the relief available to you. For the purposes of this article, we will focus on the Paycheck Protection Program loans
  • You can start by reaching out to your local lender to confirm their participation in the program and understand their deadlines and application process. You can apply through any existing SBA 7(a) lender or through any federally insured depository institution, federally insured credit union, and Farm Credit System institution that is participating. Other regulated lenders will be available to make these loans once they are approved and enrolled in the program.
  • You may also apply through the COVID-19 Economic Injury Disaster Loan Application on the SBA website

Required Documentation

Before you start your application, it may be helpful for you to download the Paycheck Protection Program Borrower Application Form to see all the information your lender will require of you and gather these documents before you start your loan application process:

  • Documentation to support your average monthly payroll costs.  Acceptable supporting documentation includes payroll processor records, payroll tax filings, Employer’s Quarterly Federal Tax Return (Form 941), Form 1099-MISC (for independent contractor applicants), or income and expenses from a sole proprietorship.  If you do not have any such documentation, you must provide other supporting documentation, such as bank records, sufficient to demonstrate the average monthly payroll amount.
  • Entity formation documents (e.g., Articles/Certificate of Incorporation and Bylaws; Articles of Organization and Operating Agreement; Partnership Agreement and filed Partnership Certificate; Trustee Certification; or Trade Name Certificate (DBA))
  • Documentation for loans received between January 31, 2020 and April 3, 2020 under Section 7(b)(2) of the Small Business Act proving that loan was for a purpose other than paying payroll costs and other allowable uses loans under the Paycheck Protection Program Rule.

Key Things to Remember

  • Your local lender can help you review your situation and determine which of the Coronavirus Relief Programs will best meet your needs
  • You must meet all the criteria outlined by the Paycheck Protection Program for your application to even be considered.
  • At this point, the funds set aside for the Paycheck Protection Program are capped at $349 billion. Apply as early as you can as those funds may run out.
  • This loan program is currently scheduled to end on June 30, 2020. Your application must be submitted by that date.

Related: The Future of Work