How to make your first PPP loan application
There are some things you should remember if you’re thinking of applying for a PPP Loan. You must first understand who is eligible to apply for PPP loans. Non-citizens, legal resident, and students with outstanding student loans are all eligible. You might also consider whether your company is listed in the SBA Franchise Directory.
Requirements to obtain a PPP loan
To be eligible for a PPP loan, the SBA has established requirements. A business concern must be organized for profit and have a permanent location in the United States. It must also pay taxes and use products made in the United States.
If a business makes a significant contribution to the U.S. economic system and employs at most five Americans, it is considered a PPP loan applicant.
PPP Loan Application Documents include identification, a null check and electronic funds transfer information. Additional documents may be required depending on the circumstances. For more information, applicants should consult their lenders. It is important to understand the requirements for loan applications.
SBA states that public companies with substantial market values cannot generally certify that they are in need of the loan in good faith. It is important to review the requirements for PPP loans prior to applying.
Calculation for Loan Amount
Before you apply for your first PPP loan you need to calculate how much you can forgive. PPP is a government program that offers forgivable loans for small business owners.
These loans are designed to assist small businesses in keeping their employees on the payroll. You can calculate how much you are eligible to forgive using the SBA Loan Forgiveness Calculation tool.
The net income and net profit of self-employed borrowers will be used to calculate their PPP loan amounts. This modification was made to make it easier to get a larger loan for self-employed individuals. This change can’t be applied to loans already approved.
You will need to cut your monthly salary by 25% if you are applying for a second PPP loan. Here are the guidelines to qualify for the second draw. You can generally get a loan up to 2.5 times your monthly average salary. You can get a loan up to $2,000,000
No-payroll Costs Eligible For Loan Forgiveness
If your payroll costs are included in a company offering PPP loans, then you might be eligible for loan forgiveness. These expenses include costs that you incur to keep your employees’ health insurance and retirement plans in good standing.
Payroll costs are limited to 2.5 percent of your total compensation for the Covered Period. If you earn less than this amount, you won’t be eligible for loan forgiveness.
Your non-payroll expenses that are eligible for loan forgiveness must not exceed 40%. These costs must have been incurred within the Covered Period. They must also be paid by the due date for regular billing.
You must have at least $50,000 in payroll to be eligible for loan forgiveness. This allows you to include payroll expenses such as salaries, benefits and other benefits. There are exceptions. You can receive forgiveness only for payroll costs of $33,333 if your employees are less than 50.
You need to be familiar with the requirements and rules before you apply for a PPP Loan. To verify your income, the lender will require certain documents such as payroll records. These documents will allow the lender to determine how much money you can borrow. Also, you will need to provide tax documentation, organizational documents, and government-issued ID.
The Borrower Application form Revised on January 8, 2021 also known as the SBA 2483, will be required. The first section of the form will ask you to describe your business including its legal structure, monthly payroll costs and number of stakeholder owners. You can also provide the year that you founded your business as well as the legal name of your business.