What are Eligibility Criteria to Get a PPP Loan?
Updated on September 2, 2021 | by Joseph Williams
You should meet the requirements to get a PPP (Paycheck Protection Program) loan. The requirements depend on whether you are looking for a first or second PPP loan. However, it is a business loan program with a design to help specific businesses, sole proprietors, self-employed workers, tribal businesses, and specific nonprofit organizations. The PPP loan permits organizations to apply for low-interest private loans. The organizations can use this loan to pay for certain costs, for example, payroll. The best payroll service for small businesses majorly incurs this loan.
Also Read: How to Get Personal Loan for Self-Employed
If the organization keeps its employee wages and counts stable, the loan may be forgiven (partially or fully). The federal agency proclaimed that a taxpayer (that requires a loan through the PPP) isn’t allowable to deduct expenses that are usually deductible. In reliance on this guide, taxpayers failed to work out costly payments with PPP loan take on their tax returns. You can organize a tax return to get a tax refund.
2021 PPP Loan Eligibility.
You can draw your first PPP loan if you have not received it before. You are only eligible to get your first PPP loan in 2021 if your business statement matches the following requirements:
- Your business should be operational and still open.
- Your business should consist of employees below 500.
- If your institution has many locations, as per location, you have no more than 500 employees.
The First PPP loan can be used to pay for rent, utilities, uninsured property damage costs, mortgage interest, and certain expenses for operations. It can also be used to pay for payroll costs including, benefits and more.
A Second PPP loan can be available for your business if you received a PPP loan earlier. You are eligible for the second PPP loan if the following conditions apply to your business.
- Your business must use up the first PPP loan.
- Business must be operational and still open.
- The business should consist of employees below 300.
- If your institution has many locations, as per location, you have no more than 300 employees.
- Show a sizeable reduction in gross revenue.
The second PPP loan is also used to pay payroll, supplier, and worker protection costs related to COVID-19.
How to Complete Your PPP Loan Application?
The following are the steps to complete your PPP loan application.
- Step 1: First of all, access your PPP application.
- Step 2: Confirm your business information that includes your business address, business type, business Tax ID, loan amount requested, and employee count. Make sure that your address is accurate with a 5-digit zip code. Confirm that you have picked out the right business type. Enter a valid 9-digit tax ID. Confirm that the ID is correct or not. The amount you requested should be 2.5 times your mean monthly payroll price. Confirm that the employees are not above 500.
- Step 3: Add new business information requirements, including the starting date of your business and industry information. If your industry is not in the options, select the closest one.
- Step 4: Enter or confirm ownership. The percentage of ownership must be greater than zero.
- Step 5: Enter additional owner information including date of birth. Add details of any individual with a 20% share in the business.
- Step 6: Upload or confirm documents. Businesses must upload 941 Quarterly Tax Filings, 944 Annual Tax Filings, Payroll Register, and recent bank statements. Contractors or Self-employed individuals must upload IRS 1040 Schedule C, Income, and Expense reports. All applicants must upload business account bank statements and other documents that can show their payroll-related costs.
- Step 7: Check your email for additional instructions.
General Disqualifiers for the PPP Loan.
You are unable to get a PPP loan if your business statement matches the following conditions during business tax preparation for disqualifying an applicant:
- If your business is not operating.
- Having a business with household employees such as housekeepers or nannies.
- The business has a fraud-related criminal record.
- You or your business is bankrupt.
- Have defaulted on a loan from any federal agency.
- Your business is a private equity firm.
- If you are running a business in an industry that is not eligible for federal agency loans.
If you will become disqualified, don’t worry, there are many other alternative funding options to explore. The resources recommended are Support from Government, Private Lenders, and many more.