Apply for a PPP Loan in 4 Simple Steps
March 24, 2021
- The Main Takeaway: Since the U.S. Small Business Administration (SBA) released new guidance for the Paycheck Protection Program (PPP), more businesses are applying for funding.
- Impact on Your Business: Preparation is key to successfully applying for a PPP loan in a timely manner and taking full advantage of the funding you’re eligible for.
- Next Steps: Be proactive and educate yourself on the four steps you need to take to apply for your PPP loan.
Ready to apply for a PPP loan and need help navigating the application process? Contact Aprio’s nationally recognized PPP team today
The full story:
Are you considering applying for a Paycheck Protection Program (PPP) loan to support your business in 2021?
You’re one of many. Since the U.S. Small Business Administration (SBA) released new guidance for the PPP to coincide with changes passed under the Consolidated Appropriations Act (the Act), more businesses are jumping at the chance to obtain funding.
To help you take full advantage of the PPP and get the funding your business deserves, I’ve broken down the application process into four basic steps.
1. Determine your eligibility for a First or Second Draw PPP Loan
As part of the changes passed under the Act, the SBA reopened the application process for businesses seeking PPP loans for the first time (also known as First Draw PPP Loans). Certain businesses that received a First Draw PPP Loan also can apply for a Second Draw PPP Loan, or a second round of loan proceeds.
The most important step in the process is understanding which type of loan your business qualifies for. Here are the baseline requirements:
- First Draw PPP Loans: You may be eligible for this loan type if your business has not yet received PPP funding. Click here to review the types of entities that are eligible for these loans to assess whether your business meets the qualification criteria.
- Second Draw PPP Loans: To be eligible, your business must have 300 or fewer employees*, a 25% reduction in gross receipts in any calendar quarter in 2020 compared to the same quarter in 2019 and previously received a First Draw PPP Loan and used, or will use, the full amount. Click here to read more about the Second Draw loan requirements.
*Exceptions in employee numbers apply for businesses in the Accommodation and Food Services sector (NAICS Code beginning with 72).
2. Calculate your maximum loan amount
The SBA has created new guidance to help businesses calculate their payroll costs and determine their maximum PPP loan amount. Businesses should use calendar year 2019 as a reference period for payroll costs, though businesses applying for First Draw PPP Loans are permitted to use calendar year 2020 costs for calculations as well. The calculation methodologies vary based on the type of business you run and the number of employees you have. The SBA provides a variety of scenarios you can use for reference when calculating your own loan amounts; you can also check out my most recent article on the topic for more information.
3. Gather the appropriate documentation
Along with creating new guidance around loan amount calculations, the SBA has provided clarification around the types of documentation businesses need to support their PPP loan applications. Shortly after this guidance was released, our PPP team published detailed overviews of the documentation requirements for both loan types. Click Here to read more about the documentation you’ll be required to provide for First Draw PPP Loan applications, and click here for more information about required documentation for Second Draw PPP Loan applications.
4. Find a participating PPP lender
Finally, you need to identify a participating PPP lender through which you can apply for funding. The SBA has created a tool to help facilitate this process: LenderMatch is a database on the SBA’s website that pairs you with reputable lenders that are offering funding. You can also team up with a professional services provider for assistance with vetting the right lender for your business.
The bottom line
Preparation is key to successfully applying for PPP funding in a timely manner. Offloading this work to a trusted expert can also take the worry off your shoulders and allow you to focus on running your business.
Aprio is a nationally recognized leader in helping businesses navigate the PPP. Through our services and expertise, we’re helping clients request forgiveness on PPP funds in excess of $450 million, while supporting them in obtaining millions more. To learn more about how we can help your business navigate the application process, contact us today.
About the Author
Justin Elanjian, CPA, is the Partner-in-Charge of Aprio’s Paycheck Protection Program (PPP) & Employee Retention Credit (ERC) Services. As a national PPP expert, prominent speaker and strategic business advisor, Justin helps both lenders and borrowers navigate the complexities of the PPP. He also helps his clients realize benefits from other stimulus package programs, such as the ERC, and is committed to strengthening his clients’ balance sheets and helping them achieve what’s next. Justin also leads a team of more than 50 professionals who share his passion for helping businesses maximize the federal COVID relief programs.