LAST UPDATED: APRIL 29, 2020

The PPP is a new loan program that provides loans on behalf of the Small Business Association (SBA) to small businesses affected by COVID-19. Qualified lenders on behalf of the SBA include banks, current SBA lenders, and certain nontraditional lenders that have been approved by the Treasury Department. These loans can be used by small businesses for payroll costs, interest on debt, rent, utilities, and group health care benefits. 

These loans will be available to businesses with fewer than 500 employees, sole-proprietors, independent contractors, and self-employed individuals. 

PPP loans are eligible for “forgiveness,” which means that the lender can release the borrower from the obligation to repay the balance. The amount that is forgiven will be determined by the amount the borrower spends during the eight-week covered period on payroll costs, interest, rent, and utility with no more than 25% of the loan amount spent on non-payroll costs. Please see FAQ for more specifics. We also recommend Intuit’s Payroll Calculator for a comprehensive calculation of your payroll costs and potential loan forgiveness. 

We have heard from many borrowers who did not have an existing banking relationship and are struggling to find a qualified SBA lender to give them a loan. We recommend using PayPal’s application process as we have received the most positive feedback regarding  PayPal’s application. 

Alternatively, Kabbage’s application process does not require a credit pull for those concerned. If you are unsuccessful with those lenders, we have also created  a list of other potential lenders here.

If you have a question that you don't see answered, or a resource that you think would be helpful for others, please fill out the FAQ Feedback Form. We will do our best to incorporate new questions into this document.

This is a rapidly evolving landscape. While we have attempted to make sure this content is current and accurate, errors may remain.

Step 1
Determine if you are eligible for a PPP loan. See FAQs below for eligibility requirements. 

Step 2
Gather the following business information to submit your application. 

1. First determine your average monthly payroll costs in order to find the maximum amount you can borrow. Check FAQs for what qualifies as a payroll cost.
   • If you use ADP for payroll, they have generated a report that should automatically estimate these costs for you. Go to https://www.adp.com/contact-us/customer-service/paycheck-protection-program.aspx and scroll down to the part that says “ADP PPP Reporting” to find the relevant how-to in order to make this determination. 
   • If you don’t use ADP:
     1. You must establish a baseline payroll time period.  You can use either the last 12 months or the full calendar year 2019. For seasonal businesses, please see the FAQ for “Payroll Calculations.” 
     2. Aggregate payroll costs for the time period chosen using employees whose principal place of residence is in the U.S. 
     3. Subtract any compensation paid to an employee in excess of an annual salary of $100,000. If you are applying as an independent contractor or sole proprietor, subtract any amounts received in excess of $100,000 per year. This is your total eligible payroll. 
     4. Calculate average monthly payroll costs by dividing the total eligible payroll by 12.
     5. If you still have questions we recommend using Intuit’s comprehensive payroll calculator for further assistance.
   • Be prepared to present payroll documentation to back up your calculation. 
2. To calculate the maximum loan amount, multiply the average monthly payroll cost you calculated above by 2.5.
   • If you have an outstanding Economic Injury Disaster Loan (EIDL) made between January 31, 2020 and April 3, 2020, you add the outstanding amount to your payroll calculation (net of the amount received from the EIDL Loan Advance).
3. Proof of being operational by February 15, 2020. This may vary from lender to lender, but many lenders we have worked with have been satisfied with a payroll report.
4. Have your Articles of Organization and W9 handy.
5. List of all owners with greater than 20% ownership share in your business. 
6. While they may not be needed, please gather tax returns and financial statements over the last 2 years in case requested. 

Step 3
Fill out SBA Form 2483. If you have any questions please refer to our FAQ. 

Step 4
Find qualified SBA Loan provider and complete the loan process with the lender. Here is a list of top SBA lenders and a list of all eligible PPP lenders. You should first check with your existing lender, as many banks are first helping customers with an existing deposit account.

Step 5
To apply for loan forgiveness, you will need documentation of the expenses you will pay during the eight week period after you receive an SBA PPP loan. Be sure you are prepared to document expenses and do so, because at least 75% of the loan must be used on payroll costs to be eligible for forgiveness. 

Eligibility

1. Am I eligible? Show Comment Hide Comment

   You are eligible for a PPP loan if you are a small business and have 500 or fewer employees (whose principal place of residence is in the United States), or no greater than the number of employees set by the SBA as the size standard for certain industries.

   • Small businesses may include a 501(c)(3) nonprofit organization, a 501(c)(19) veterans organization, a tribal business, an individual who operates under a sole proprietorship, an individual who operates as an independent contractor, or an individual who is self-employed.

   You must have been in operation on February 15, 2020.

   You must submit such documentation as is necessary to establish eligibility such as payroll processor records, payroll tax filings, or Form 1099-MISC, or income and expenses from a sole proprietorship. 

2. How do I determine if I am ineligible? Show Comment Hide Comment

   Businesses that are not eligible:

   1. Businesses that are engaged in any activity that is illegal under federal, state, or local law. 
   2. Household employers (individuals who employ household employees such as nannies or housekeepers).
   3. Financial businesses primarily engaged in the business of lending, such as banks, finance companies, and factors. 
   4. Passive businesses owned by developers and landlords that do not actively use or occupy the assets acquired or improved with the loan proceeds (except Eligible Passive Companies) 
   5. Life insurance companies
   6. Businesses located in a foreign country (businesses in the U.S. owned by aliens may qualify) 
   7. Pyramid sales distribution plans
   8. Businesses deriving more than one-third of gross annual revenue from legal gambling activities 
   9. Private clubs and businesses which limit the number of memberships for reasons other than capacity
   10. Government-owned entities (except for business owned or controlled by a Native American tribe)
   11. Businesses principally engaged in teaching, instructing, counseling or indoctrinating religion or religious beliefs, whether in a religious or secular setting.
   12. Consumer and marketing cooperatives (producer cooperatives are eligible)
   13. Loan packagers earning more than one third of their gross annual revenue from packaging SBA loans
   14. Businesses in which the lender or any of its Associates owns an equity interest
   15. Businesses with an owner of 20% or more of the equity of the applicant is incarcerated, on probation, on parole; presently subject to an indictment, criminal information, arraignment, or other means by which formal criminal charges are brought in any jurisdiction; or has been convicted of a felony within the last 5 years
   16. Businesses which present live performances of a prurient sexual nature; or derive directly or indirectly more than 5% of their gross revenue through the sale of products or services, or the presentation of any depictions or displays, of a prurient sexual nature
   17. A business or applicant involved in a business which is currently delinquent or defaulted on a Federal loan or Federally assisted financing resulting in a loss to the government within the last 7 years. A compromise agreement shall also be considered a loss
   18. Businesses primarily engaged in political or lobbying activities
   19. Speculative businesses (such as oil wildcatting)
3. Am I still eligible if I’m not a United States citizen, but my business is located in the U.S.? Show Comment Hide Comment

   You do not need to be a U.S. citizen to take advantage of this program. However, for the purpose of the loan, payroll costs only consists of compensation to employees whose principal place of residence is the United States

Payroll Calculation

1. I have determined that I am eligible. How much can I borrow? Show Comment Hide Comment

   The loan amount can be up to 2.5x the business owner’s average monthly payroll costs, not exceeding $10 million. 
   Here is how you calculate your maximum amount:

   1. Step 1: Aggregate payroll costs from the last 12 months for employees whose principal place of residence is in the U.S.
   2. Step 2: Subtract any compensation paid to an employee in excess of an annual salary of $100,000 and/or any amounts paid to an independent contractor or sole proprietor in excess of $100,000 per year. 
   3. Step 3: Calculate average monthly payroll costs by dividing the amount from Step 2 by 12. 
   4. Step 4: Multiply the average monthly payroll costs from Step 3 by 2.5. 
   5. Step 5: If you have an outstanding Economic Injury Disaster Loan (EIDL) made between January 31, 2020 and April 3, 2020, subtract the amount of any “advance” under an EIDL COVID-19 loan. 
2. What qualifies as "payroll costs?" Show Comment Hide Comment

   Payroll costs consist of compensation to employees whose principal place of residence is the United States in the form of salary, wages, commissions, or similar compensation, such as:

   1. Cash tips or the equivalent based on employer records of past tips or, in the absence of such records, a reasonable, good-faith employer estimate of such tips. 
   2. Payment for vacation, parental, family, medical, or sick leave
   3. Allowance for separation or dismissal
   4. Payment for the provision of employee benefits consisting of group health care coverage, including insurance premiums, and retirement. 
   5. Payment for the provision of employee benefits consisting of group health care coverage, including insurance premiums, and retirement. 
   6. Payment of state and local taxes assessed on compensation of employees
   7. For an independent contractor or sole proprietor: wage, commissions, income, or net earnings from self-employment or similar compensation
3. Is there anything that is expressly excluded from the definition of payroll costs Show Comment Hide Comment

   The act expressly excludes the following:

   1. Any compensation of an employee whose principal place of residence is outside of the United States
   2. The compensation of an individual employee in excess of an annual salary of $100,000. 
   3. Federal employment taxes imposed or withheld between February 15, 2020 and June 30, 2020, including the employee’s and employer’s share of FICA (Federal Insurance Contributions Act) and Railroad Retirement Act taxes, and income taxes required to be withheld from employees
   4. Qualified sick and family leave wages for which a credit is allowed under the Families First Coronavirus Response Act.
4. The CARES Act excludes from the definition of payroll costs any employee compensation in excess of an annual salary of $100,000. Does that exclusion apply to all employee benefits of monetary value? Show Comment Hide Comment

   No. The exclusion of compensation in excess of $100,000 annually only applies to cash compensation and does not apply to benefits to an employee, including employer retirement contributions, other employee benefits, and payment of state and local taxes. 

5. What time period should borrowers use for the payroll calculation? Show Comment Hide Comment
   • The time period to calculate the payroll cost is the applicant’s choice between the previous 12 months or calendar year 2019. 
   • For seasonal businesses, the applicant may use average monthly payroll for the period between February 15, 2019, or March 1, 2019, and June 30, 2019. 
   • An applicant that was not in business from February 15, 2019 to June 30, 2019 may use the average monthly payroll costs for the period January 1, 2020 through February 29, 2020. 
6. Do independent contractors count as employees for purposes of PPP loan calculations? What about loan forgiveness? Show Comment Hide Comment

   No, independent contractors have the ability to apply for a PPP loan on their own so they do not count for purposes of a borrower’s PPP loan calculation or forgiveness.

Loan Proceeds

1. How can PPP loans be used? Show Comment Hide Comment
   • The proceeds of a PPP loan are to be used for:
     1. Payroll costs
     2. Costs related to the continuation of group health care benefits during periods of paid sick, medical, or family leave, and insurance premiums
     3. Mortgage interest payments (but not mortgage prepayments or principal payments)
     4. Rent payments
     5. Utility payments
     6. Interest payments on any other debt obligations that were incurred before February 15, 2020
     7. Refinancing an SBA EIDL loan made between January 31, 2020 and April 3, 2020
     8. If you received an SBA EIDL loan from January 31, 2020 16 through April 3, 2020, you can apply for a PPP loan. If your EIDL loan was not used for payroll costs, it does not affect your eligibility for a PPP loan. If your EIDL loan was used for payroll costs, your PPP loan must be used to refinance your EIDL loan. Proceeds from any advance up to $10,000 on the EIDL loan will be deducted from the loan forgiveness amount on the PPP loan. 
   • At least 75% of the PPP loan proceeds shall be used for payroll costs. 
     1. For purposes of determining the percentage of use of proceeds for payroll costs, the amount of any EIDL refinanced will be included. For purposes of loan forgiveness, however, the borrower will have to document the proceeds used for payroll costs in order to determine the amount of forgiveness

    

2. Do PPP loans cover paid sick leave? Show Comment Hide Comment

   Yes, PPP loans cover payroll costs including costs for employee vacation, parental, family, medical, and sick leave. 

3. What happens if PPP loan funds are misused? Show Comment Hide Comment
   • If you use PPP funds for unauthorized purposes, SBA will direct you to repay those amounts. 
   • If you knowingly use the funds for unauthorized purposes, you will be subject to additional liability such as charges for fraud. 
   • If one of your shareholders, members, or partners uses PPP funds for unauthorized purposes, SBA will have recourse against the shareholder, member, or partner for the unauthorized use. 

Loan Forgiveness

1. Can my PPP loan be forgiven? Show Comment Hide Comment

   Yes, if the following occurs: 

   1. You must maintain your employee level or rehire the employees you laid off during the beginning weeks of the pandemic by June 30
   2. You must not reduce wages paid to employees by 25% or more.
   3. 75% of the loan must be used on payroll costs
   4. Funds must be used for payroll costs, interest on mortgages, rent, and utilities
2. How much can my loan forgiveness be reduced by? Show Comment Hide Comment

   If there is a reduction in the number of employees during the eight weeks beginning on the loan origination, the loan forgiveness will be reduced by: 

   1. (Payroll Cost) x (Average Number of Full Time Employees Per Month for the 8-Weeks Beginning on Loan Origination) / (Average Number of Full Time Employees During One Year Prior or Full Year 2019) 

    

   If there is a reduction of greater than 25% in wages paid to employees, the loan forgiveness will be reduced by:

   1. (Payroll Cost) - (The Amount of Any Reduction in Wages That is Greater than 25% Compared to Their Most Recent Quarter)
   2. This applies only to employees who did not earn during any pay period in 2019 wages at an annualized rate of more than 100k 
3. Who qualifies as a Full-Time Employee (FTE)? Show Comment Hide Comment

   The SBA defines a full-time employee as one who is employed an average of 30 hours or more a week. 

4. The amount of forgiveness depends on my payroll costs over an 8 week period. When does that 8 week period begin? Show Comment Hide Comment

   The 8 week period begins on the date the lender makes the first disbursement of the PPP loan. 

5. Do I have to request for loan forgiveness? Show Comment Hide Comment
   • Yes, you must make a request to the lender that is servicing the loan. You must include documents that verify the number of full-time equivalent employees and pay rates, as well as the payments on eligible mortgage, lease, and utility obligations. 
   • The lender will make a decision on the forgiveness within 60 days.  

Loan Details

1. What is the interest rate on a PPP loan? Show Comment Hide Comment

   Interest rate will be 1%.

2. What will be the maturity date on a PPP loan? Show Comment Hide Comment

   The maturity is 2 years.

3. How quickly will I receive my funding? Show Comment Hide Comment
   • Speed of payment will depend on how quickly your lender can process your application.
   • Once your loan is approved, the first disbursement of PPP funds to the borrower will occur within 10 business days of the loan approval. 
4. Does my bank have to offer PPP loans? Show Comment Hide Comment

   No, there is no requirement for any bank to make PPP loans. If the bank you use for your small business banking is not offering PPP loans you can try another institution. Here is a list of top SBA lenders and a list of all eligible PPP lenders.

5. Is there a minimum credit score? Show Comment Hide Comment

   No, there is no minimum credit score required by the SBA.

6. When will I have to begin paying principal and interest on my PPP loan? Show Comment Hide Comment

   You will not have to make any payments for 6 months following the date of disbursement of the loan. However, interest will continue to accrue on PPP loans during this 6-month deferment. 

7. Are there any collateral or personal guarantees? Show Comment Hide Comment

   No, there is no collateral and no personal guarantee.

8. Can I apply for more than one PPP loan? Show Comment Hide Comment

   No, an entity is limited to one PPP loan. Each loan will be registered under a Taxpayer Identification Number at SBA to prevent multiple loans to the same entity. 

9. Can I use e-signatures or e-consents if a borrower has multiple owners? Show Comment Hide Comment

   Yes, e-signature or e-consents can be used regardless of the number of owners.

10. Is the PPP “first come, first serve”? Show Comment Hide Comment

    Yes.

11. What certifications need to be made? Show Comment Hide Comment

    On the Paycheck Protection Program application, an authorized representative of the applicant must certify in good faith to all of the below

    1.  The applicant was in operation on February 15, 2020 and had employees for whom it paid salaries and payroll taxes or paid independent contractors, as reported on a Form 1099-MISC
    2. Current economic uncertainty makes this loan request necessary to support the ongoing operations of the applicant.
    3. The funds will be used to retain workers and maintain payroll or make mortgage interest payments, lease payments, and utility payments
    4. I understand that if the funds are knowingly used for unauthorized purposes, the federal government may hold me legally liable such as for charges of fraud. As explained above, not more than 25 percent of loan proceeds may be used for non-payroll costs.
    5. Documentation verifying the number of full-time equivalent employees on payroll as well as the dollar amounts of payroll costs, covered mortgage interest payments, covered rent payments, and covered utilities for the eight week period following this loan will be provided to the lender.
    6. Loan forgiveness will be provided for the sum of documented payroll costs, covered mortgage interest payments, covered rent payments, and covered utilities. As explained above, not more than 25 percent of the forgiven amount may be for non-payroll costs.
    7. During the period beginning on February 15, 2020 and ending on December 31, 2020, the applicant has not and will not receive another loan under this program.
    8. I further certify that the information provided in this application and the information provided in all supporting documents and forms is true and accurate in all material respects. I understand that knowingly making a false statement to obtain a guaranteed loan from SBA is punishable under the law, including under 18 USC 1001 and 3571 by imprisonment of not more than five years and/or a fine of up to $250,000; under 15 USC 645 by imprisonment of not more than two years and/or a fine of not more than $5,000; and, if submitted to a federally insured institution, under 18 USC 1014 by imprisonment of not more than thirty years and/or a fine of not more than $1,000,000.
    9. I acknowledge that the lender will confirm the eligible loan amount using tax documents I have submitted. I affirm that these tax documents are identical to those submitted to the Internal Revenue Service. I also understand, acknowledge, and agree that the Lender can share the tax information with SBA’s authorized representatives, including authorized representatives of the SBA Office of Inspector General, for the purpose of compliance with SBA Loan Program Requirements and all SBA reviews.

Affiliation

1. Are affiliates considered together for purposes of determining eligibility? Show Comment Hide Comment

   Yes, in most cases a borrower will be considered together with its affiliates for purposes of determining eligibility.  

   • Some exceptions to this rule include any business that is

   1. Assigned a North American Industry Classification System code beginning with 72. 
   2. Operating as a franchise that is assigned a franchise identifier code
   3. Receiving financial assistance from a company licensed under section 301 of the Small business Investment Act of 1958.
2. How does affiliation work for minority owners? Show Comment Hide Comment
   • A minority shareholder in a business is subject to the affiliation rule if the shareholder has the right to prevent a quorum or otherwise block action by the board of directors or shareholders. 
   • If a minority shareholder irrevocably waives or relinquishes those rights, the shareholder would no longer be an affiliate of the business. 

For borrowers struggling to find a qualified lender, we have laid out the steps required for filling out PayPal’s online process. We have found this to be the best solution thus far.

Go to https://www.loanbuilder.com/ppp-loan-support to begin and click “Apply Now”

They will collect your personal information and check to make sure you are eligible. They will ask the following:

• “Please add your business name, the owner’s (or authorized representative’s) first and last name, and email.”
• “Is the Applicant or any owner of the Applicant presently suspended, debarred, proposed for debarment, declared ineligible, voluntarily excluded from participation in this transaction by any Federal department or agency, or presently involved in any bankruptcy?”
  • This is the type of question where, if you have no idea what they are talking about, it’s unlikely that the answer is yes!
• Has the Applicant, any owner of the Applicant, or any business owned or controlled by any of them, ever obtained a direct or guaranteed loan from SBA or any other Federal agency that is currently delinquent or has defaulted in the last 7 years and caused a loss to the government?”
  • Have you defaulted on an SBA (or other guaranteed) loan in the last 7 years? Check with your accountant if you are not sure!
• “Is the Applicant (if an individual) or any individual owning 20% or more of the equity of the Applicant subject to an indictment, criminal information, arraignment, or other means by which formal criminal charges are brought in any jurisdiction, or presently incarcerated, or on probation or parole?”
  • If you are not aware of any criminal or legal proceedings against you, the answer is probably no - but if you’re not sure, check with your lawyer.
• “Within the last 5 years, for any felony, has the Applicant (if an individual) or any owner of the Applicant 1) been convicted; 2) pleaded guilty; 3) pleaded nolo contendere; 4) been placed on pretrial diversion; or 5) been placed on any form of parole or probation (including probation before judgment)?”
  • Basically: if you have been accused of a felony and in some way suffered a consequence for it, you may have to answer yes; otherwise, it’s unlikely that the answer is yes (but check with your lawyer if you’re not sure).
• “Has the Applicant been approved for another PPP Loan?”
  • Answer this honestly - you only get to receive one PPP loan, and there are financial penalties for fraud!

They will ask for the following information about your business and payroll numbers:

• Business type
  • E.g. S-Corp, C-Corp (just select from the drop down)!
• Trade name or DBA (if different from legal name)
  • Any name(s) you do business as, if it’s different from the legal name you entered on the previous page!
• Business address (including city, state, and zip)
• Business phone number
• Business start date (mm/yyyy)
  • The month and year your business was started. It needs to be on or before February 15, 2020 in order to be eligible.
• Business industry and sub-industry
  • If you’re unsure of your business industry or sub-industry, double check with your accountant!
• Number of employees
  • We discuss how to find this in our general FAQ!
• Average monthly payroll
  • We discuss how to find this in our general FAQ!
• “Is the United States the principal place of residence for all employees of the Applicant included in the Applicant’s payroll calculation above?”
  • You can only include employees who live (primarily) in the United States.

They will ask for the following personal information:

• Job title
  • Your role at the company
• Phone number
• Social security number
  • We haven’t been able to confirm, but it’s possible that Paypal is using this to check your personal credit history (i.e. to check your personal credit). We are mindful that some customers may not want to include this and will update this page once we know.
• Federal Tax ID
  • For most businesses, this is your EIN (Employer Identification Number)
• Date of birth and home address
• “What percent of the business do you own”?
  • They need to know every owner who is at least a 20% owner. For more information about this process, check out our FAQ page!
• Are you a controlling manager of the business?
  • This manager role has a significant impact on business decisions. In a big business, it might be the CEO or CFO. In a smaller business, it might be the general manager or bookkeeper.

They will ask more about the loan itself:

• Loan uses
  • Check all of the uses that apply! The payroll calculator can help you figure out your potential uses
• “Is the applicant a franchise?”
  • If you’re unsure about this, check with your accountant!
• “Is the Applicant or any owner of the Applicant an owner of any other business, or have common management with, any other business?”
  • If you have questions about this, check out our affiliation FAQs!
• “Has the Applicant received an SBA Economic Injury Disaster Loan between January 31, 2020 and April 3, 2020?”
  • [This matters because your Economic Injury Disaster Loan can be rolled into your PPP loan, if you wish]

Certifications

• You’ll need to read the certifications and verify them yourself. You must make all of the certifications to apply. Check with your lawyer (or, possibly, your accountant) if you have any questions!

Submit!

After you submit, you’ll be asked to upload documentation. Your payroll report is sufficient, but you can download PPP’s loan calculator (.XLSX) for a more comprehensive list.

They will reach out to you as soon as possible to get you to sign the loan documents and fund your account!