Paycheck Protection Program: How to Apply for a Forgivable Loan During COVID-19

Does your small business need financial assistance as a result of the coronavirus pandemic? If so, one of the biggest federal initiatives for small businesses is the Paycheck Protection Program.

Want to know more about eligibility, important dates, and the application process? We’ve got you covered. 

What is the Paycheck Protection Program?

The Paycheck Protection Program (PPP) provides forgivable loans to small businesses to help cover up to 24 weeks of payroll costs and qualifying non-payroll costs. PPP is a small business relief measure that incentivizes businesses to retain employees on payroll.

Here are some fast facts about all the Paycheck Protection Program-related legislation signed into law:

Although the Paycheck Protection Program closed on August 8, 2020, the Consolidated Appropriations Act reopened the program through March 31, 2021. 

This means you have until March 31, 2021 to apply for your first or second PPP loan. 

What can employers use PPP funds for?

If you take out a PPP loan, you need to spend the money on qualifying expenses if you want it to be forgiven. Although you can use the money for non-qualifying expenses, that portion of spending will not be forgiven. 

For PPP forgiveness, use the loan on the following eligible expenses:

Payroll costs (60% of loan proceeds)
Salaries, wages, commissions, or tips ($100,000 max per employee—gross earnings) Employee benefits (e.g., vacation; sick leave; health care benefits; retirement benefits; and group life, disability, vision, and dental insurance) State and local taxes   Non-payroll costs (40% of loan proceeds) 
Interest on mortgages  Rent Utilities Covered operations expenditures (e.g., business software or payroll tracking expenses) Covered property damage (e.g., vandalism or looting) Supplier costs (i.e., essential items for operation) Worker protection expenditures (e.g., personal protective equipment)

The Consolidated Appropriations Act expanded eligible expenses to include covered property damage; supplier costs; worker protection expenditures; and group life, disability, vision, and dental insurance.

Keep in mind that independent contractors are not on payroll. Because they do not count as employees, do not include their payments when calculating your payroll costs. 

Second-time borrowers 

The great thing about PPP 2.0 is that employers who already took out a loan in 2020 may be eligible. This is known as “Second Draw” PPP loans. 

To be eligible for a second PPP loan, you must: 

Employ 300 or fewer employees Have used up your first PPP loan proceeds Demonstrate that your gross receipts in any 2020 quarter are at least 25% less than the same 2019 quarter Not engage in political or lobbying activities, describe yourself as a think tank, or be affiliated with businesses in China Not receive a Shuttered Venue Operator Grant How much can you receive?

First-time applicants can receive PPP loans of up to $10 million. Second-time applicants can receive PPP loans of up to $2 million. 

To calculate your loan amount, multiply your average total monthly payment for payroll costs (either during the one-year period before the loan is made OR calendar year 2019) by 2.5. 

If your business is in Accommodation and Food Services industries, multiply your average total monthly payment for payroll costs by 3.5. 

Seasonal businesses can choose any 12-week period between February 15, 2019 – February 15, 2020 and multiply monthly payroll costs by 2.5.

Who can apply?

Small businesses with 500 or fewer employees can apply for a

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