How to Apply for the Paycheck Protection Program

Tyler Winn

There’s no denying the coronavirus outbreak has hurt millions of businesses across the country. To help them keep their employees on payroll and continue operations, the Small Business Administration (SBA) introduced the Paycheck Protection Program (PPP) on April 24th 2020.

The PPP is a part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act and serves as a forgivable loan of up to $10 million. Small businesses who apply for and receive the loan can use the funds to cover payroll, utilities, and a several other qualifying expenses. 

Since the $349 billion allocated to the first round of funding ran out after two weeks, the PPP received an additional $310 billion in funding. Ever since April 27th, eligible small business owners have had the opportunity to apply for this second round of the PPP. 

If you’re a small business owner wondering whether you qualify for the PPP and curious as to how it works, keep reading as we dive deep into the details. 

What to Expect From the PPP

At its core, the PPP is a unique version of the  SBA 7(a) loan which supports small businesses financially. It’s a mix between a loan and a grant and requires small business owners to go through these four steps.

  1. Apply for a Loan: You can apply for the PPP loan with your bank or credit union, as long as they’ve been approved by the SBA to offer it. An online lender may also accept your application.
  2. Wait for Approval: After you apply for the PPP, you’ll need to wait for approval. Keep in mind that countless small business owners have applied it so it may take some time to hear back. Once you’re approved, the funds will get deposited directly into your bank account.
  3. Apply for Forgiveness: If you use the money for qualifying expenses and keep your employees on payroll, you can apply for your loan to be forgiven eight weeks after you receive the funds. 
  4. Repay the Balance: In the event a portion of your loan is not forgiven, you’ll have two years to repay it at a 1% interest rate.

Who Can Apply for the PPP?

You may be eligible for the PPP if you meet the following criteria:

  • You’re a small business, non-profit, or veterans organization in the  U.S.
  • You have less than 500 employees. 
  • You’re a sole proprietor or self employed.
  • Your business has been affected by COVID-19. 
  • Your business was fully operational on February 15, 2020. 

What Can the PPP Be Used For?

The PPP was specifically designed to protect your paycheck as well as the paychecks of your employees so you can continue to run your business. Although loans are capped at $10 million, you can borrow a maximum of one month of your eligible payroll costs multiplied by 2.5. Eligible costs include the following:

  • Payroll expenses
  • Employee salaries, commissions, and bonuses
  • Paid, sick, medical, and family leave costs
  • Insurance premiums
  • Interest on mortgage obligations and rent
  • Electricity, gas, water, internet, phone, and other utilities
  • Debt interest incurred prior to the covered period

How to Apply for the PPP

The PPP began to accept applications on April 3rd but you can still apply and potentially receive approval from the second round of funding. Keep in mind that funds are sure to run out quickly again so it’s in your best interest to go through the application process as soon as you can. 

If the bank you partner with for your business offers PPP loans, it’s easiest to apply through them. In the event it doesn’t, you’ll need to find another bank, credit union, or online lender that accepts PPP applications. When you apply, you’ll need to provide this information.

  • Business Details: The legal name of your business as well as your business type, business, address, and phone number. You’ll also need to share your Employer Identification Number (EIN) or Social Security Number (SSN). 
  • Loan Purpose and Amount: Your average monthly payroll times 2.5 plus how you plan to use the funds.
  • Ownership Information: A list of all business owners who have at least a 20% stake in the business. 

Most lenders will keep you updated and let you know where your application stands in the process through email updates or an online portal. Upon approval, they’ll disburse your funds to your business bank account. 

Contact Cirrus Payroll for Assistance

If you’d like to apply for the PPP and have further questions on eligibility or the application process, don’t hesitate to contact us today. We are dedicated to supporting our small business customers during these uncertain times.