PPP Loans and What You Need to Know

The PPP Loan discussions and complications seem to be the trend of the internet. Banks halting acceptance of applications, additional requirements from different banking institutions, forgiveness criteria being picked apart are all just adding to the stress. We want to be clear and eliminate misinformation. So here is our simplified breakdown of the Who, What, When, Where, How, and Why.

The Who:

The SBA is not the lender. The SBA is simply the backer of the loan that is processed through your banking institution. The businesses that are eligible must have been operational as of February 15, 2020 and:

  • a small business with fewer than 500 employees, regardless of revenue
  • a small business that otherwise meets the SBA’s size requirements
  • sole proprietors, independent contractors, and self-employed individuals who regularly carry on any trade or business, including those in the “gig economy”
  • a hospitality or food service business (those with an NAICS code beginning with 72) if it has fewer than 500 employees per physical location
  • a non-profit entity under Section 501(c)(3) of the Internal Revenue Code of 1986, as amended (Internal Revenue Code), so long as that entity has fewer than 500 employees
  • a veterans organization under Section 501(c)(19) of the Internal Revenue Code that meets the SBA’s size requirements
  • a tribal business entity that meets the SBA’s size requirements


For the self-employed and contractors looking to apply on April 10, 2020 you will completing the same information as a business proving up your application with financials. Each lender might have some different requests so make sure to rely on your bank relationship agent to get all the documents together you will need.


The What:

The “Paycheck Protection Program” is a loan designed to provide a direct incentive for small businesses to keep their workers on the payroll.” (SBA, 2020) This simply put, you must use these funds to keep employees or rehire them back soon. The program does have a feature to be forgivable IF you maintain your workforce. There is a sliding scale down if full time employees decline or their wages decrease. This means that some portion can be forgiven and some portion will be repayable at a two year 1% interest term rate. ALL applicants receive the same terms. No collateral or personal guarantees needed.


The When:

Small businesses were able to start applying April 3 and self employed can start applying April 10. Just because applications can be accepted does not mean all banks are up and running. Wells Fargo alone has opened up, had to shut down accepting more applications, and now potentially will have expanded resources to be able to reopen accepting application. Other banks are working as fast as they can through this. Here is a comprehensive list of PPP Lenders, requirements, and statuses as of today from SmartAsset.


The Where:

You will need to reach out to the bank that you have your existing business relationship with in order to apply. You can verify your bank’s participation as an SBA lender here. In addition to banks, there are a handful of small business lenders also processing these applications such as Kabbage. Make sure that you read ALL of the disclosures and seek out the advice of your professional accountant. If you currently do not have a CPA or Advisor you can reach out to us at: jessecure.com/contact.


The How:

The PPP Loan program comes to us as a part of the larger relief package referred to as the CARES ACT. This loan will be available on a first come first serve basis until all the allocated funds have been depleted. So even if your bank is not accepting application yet you need to be ready to go. IF you are working with a CPA or firm make sure you have supplied them with any information they are requesting as well.


The Why:

The PPP Loan is designed to maintain your workforce. While there are some other expenses that can be paid with these funds the primary use MUST be towards payroll expenses, with the rule being cited as 75% of the total loan. Additional expenses for the remaining 25% can be utilities, mortgage interest (not principal) and rent payments. If you use all the funds over eight weeks within these guidelines you can apply for forgiveness.


Again, this loan is designed to be poured into your company to maintain your staff. There are many questions about special situations and the best I can advise at this point is the rules are lined out and I am sure that as we approach the 8th week deadline we will see a surge of more information released which we will report on, but for now operate under the assumption there is not special circumstance consideration.

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