PPP Loans – Why & How to Get One
What is a PPP loan? Under the Paycheck Protection Program, eligible applicants can receive low-interest government loans for payroll and other business-related expenses. Approval usually takes around a week and funds are disbursed within 10 days from the date of approval. If you're eligible for a PPP loan, you have until May 31, 2021 to apply.
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UPDATED: Apr 29, 2021
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- The Paycheck Protection Program was established to alleviate the economic distress caused by the coronavirus pandemic.
- PPP loans are equal to roughly 2.5 times an applicant’s monthly payroll costs.
- PPP loans may be partially or fully forgiven if the business keeps its employee count and wages stable.
In April 2020, as the coronavirus pandemic ravaged the world economy, the United States government passed the Paycheck Protection Program (PPP) to help small and struggling businesses stay afloat.
As part of this package, the government began offering PPP loans to eligible applicants. The top 10 industries for Paycheck Protection Program assistance received billions of dollars in loans.
But what is a PPP loan and how do you know if you’re eligible? Perhaps you’re wondering if you can receive one of these loans. We’re here to help you navigate this complex business loan process.
Keep reading below to find out more about the Paycheck Protection Program, what a PPP loan is, and how you can get one. But before you do, enter your ZIP code above to find affordable PPP loans from lenders in your area.
What is the Paycheck Protection Program?
As a result of the coronavirus pandemic, the Paycheck Protection Program (PPP) was established in April 2020 to help safeguard the U.S. economy and keep people from losing their jobs.
Under the PPP, $953 billion was set aside for loans to eligible businesses and workers to help cover payroll costs, rent, interest, and utilities.
Some states received more aid than others, largely due to a greater need. Check out the 10 best states for Paycheck Protection Program assistance to see if your state falls into this category.
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What is a PPP loan?
So what is a PPP loan? Simply put, a PPP loan is a government loan available to eligible applicants as part of the Paycheck Protection Program.
A PPP loan is a low-interest loan equal to about 2.5 times the applicant’s average monthly payroll costs. Applicants can also receive a second loan roughly equal to the first if they qualify.
Not everyone is eligible for a PPP loan and, as mentioned earlier, the loans can only be used for specific expenses. The loan may be partially or fully forgiven if the recipient keeps their employee count and wages stable.
According to the U.S. Small Business Administration, sole proprietors, independent contractors, self-employed persons, and certain businesses are eligible for PPP loans.
For example, a young woman who runs an Etsy shop out of her apartment may be eligible for a PPP loan. Sound like you? Check out the 10 best states for Paycheck Protection Program assistance for female business owners to see if your state made the list.
How do I get a PPP loan?
So, how do you get a PPP loan? Well, as we mentioned earlier, you have to be a sole proprietor, independent contractor, self-employed person, or a certain kind of business to be eligible.
If you fall into one of those categories, then congratulations! Your next step is to apply for a PPP loan with this form from the U.S. Small Business Administration website. President Biden has recently extended the application deadline to May 31 of 2021, so make sure to take care of this soon.
Once approved, the Small Business Administration is required to fund your loan within 10 calendar days from the date of approval. Then the funds are yours to use.
Now you know the answer to the question, “What is a PPP loan?” If your business needs financial help, enter your ZIP code into our comparison tool below to find affordable loans from lenders in your area.