- Businesses with 500 or fewer employees are eligible. PPP loans are available to any business with 500 or fewer employees. A business that meets the SBA size standard for its industry based on headcount or annual receipts may also be eligible. There are other eligibility criteria that apply specifically to PPP loans – businesses should ensure they satisfy applicable criteria prior to submitting an application.
- Independent contractors and sole proprietors can apply. Self-employed individuals such as independent contractors or sole proprietors are eligible for a PPP loan if they were in operation on February 15, 2020, have self-employment income, and meet certain other criteria. Please note that applying for a PPP loan may impact an individual’s ability to apply for unemployment programs.
- Businesses can obtain loans to cover payroll and other limited expenses A borrower’s maximum loan amount under the PPP is calculated based on averaging monthly payroll expenses. Businesses and self-employed individuals can obtain loans of up to 2.5x the average of their monthly payroll expenses, up to a cap of $10 million. Loan proceeds can be used to cover payroll, mortgage interest, rent and utilities. Loan proceeds may not be used for other purposes.
- PPP loans may be fully forgiven. PPP loans will be fully forgiven if at least 75% of the loan proceeds are used to cover payroll costs. If a business uses less than 75% for payroll, the amount of loan forgiveness will be reduced accordingly, and any amounts that are not forgiven will convert to a loan with a 1% interest rate. Loan payments will be deferred for six months, though interest will continue to accrue over this period. The loan must be repaid within two years from the date of distribution.
- Businesses are permitted to obtain both a PPP Loan and an Economic Injury Disaster Loan (EIDL). A business may apply for both loans but cannot use them for the same purposes. Eligibility criteria is similar for both PPP and EIDL loans (though not identical). Here is a brief comparison of each loan type:
|Loan Terms||Up to $10 M; 1% interest rate, 2 year repayment term; 6 mo. deferral period; loan may be forgiven.||Up to $2 M; 2.75 – 4% interest rate; up to 30 year repayment term; 1 year deferral period; loan cannot be forgiven.|
|Emergency Grant||No.||Yes. $1000 for eligible individuals; $10,000 for eligible businesses.|
|Use of proceeds||Payroll, mortgage interest, rent, utilities||Capital and expenses required to relieve the injury caused by COVID-19. Payroll, rent, mortgage expenses and utilities if applicant does not obtain a PPP loan.|
|Collateral /personal guarantee||None required||No personal guarantee required for loans up to $200,000. Collateral may be required for loans above $25,000 (the SBA is flexible).|
|Application process||Must apply through a lender. Process is expected to take no more than 10 dates from application to funding.||Must apply through the SBA. Process is backlogged; timeframes are much longer than for PPP loans.|
- A range of bank and nonbank lenders can make PPP loans. PPP loans are available through banking institutions of all sizes, from large national banks to smaller community banks and credit unions. Several non-banks lenders, including PayPal and Square, are also authorized to make PPP loans. While some institutions require that a business have an existing relationship in order to apply, this is not a requirement for many PPP lenders. Please check the SBA website for a current list of lenders.
- Applications are first come, first served. Loans are being processed on a first come, first served basis. The first round of funds were allocated in less than two weeks; this additional funding is expected to be depleted even faster. Any business or individual considering a PPP loan should identify a lender and submit a PPP application as soon as possible.
For additional information about the PPP loan update, the loan process, and other program details, please refer to the PPP FAQs available on our website.
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