Guide to SBA PPP Loans
Under the CARES Act, the SBA created the Payment Protection Program (PPP), offering forgivable loans to help small businesses and self-employed workers under financial strain.
Alert! This loan program ended in June 2021.
Paycheck Protection Program (PPP)
Borrow 2.5 times your monthly payroll costs, including compensation and other payroll-related costs, or 3.5 for restaurants and hospitality businesses.
Most for-profit and non-profit businesses qualify. Must have 300 employees or fewer and be US-based.
Loan can be forgiven (never needs repaying!) if at least 60% of funds are spent on eligible payroll costs. Easy forgiveness process for loans < $150k
No credit check and no collateral required. No review of business financials or operating info.
No payments for 10 months, interest rate of 1%. If the loan is forgiven, no payments will need to be made and no interest will be owed.
Loans are based on your payroll and payroll-related costs only. No collateral is required.
From Our PPP Loan Clients
"I applied for a PPP loan when my business was at risk of going under. I applied to various lenders and Everfund was by far the best. Quick, easy, and professional."
"I had a fabulous experience with Everfund. I had spoken with other lenders with no success, but once I contacted Everfund I was approved for my PPP loan in less than a week."
"I tried getting a PPP loan with other lenders with no success. My experience with Everfund was great - very professional and efficient. I can't thank Everfund Commercial enough."
"After working with Wells Fargo on the PPP with no success for months, I turned to Everfund and had instant success. Thank you Everfund, I highly recommend you!"
"Everfund was a lifesaver. Their assistance in obtaining a PPP loan likely saved 5 to 6 jobs. When my banks were of little help, Everfund was there. I encourage anyone to contact Mike and Everfund."
"I was so impressed! Everfund really simplified the whole process and made it all completely pain free. I just can't thank you enough for all of your help. We are grateful."
"I have many years of bank experience, so I know the loan process. Everfund was so efficient, professional and knowledgable. Thank you so much for the guidance and help!"
Dr. Juanito Reyes
""Awesome work! Everfund was sure they could get me approved after my firm was denied by another bank. Thanks so much for getting my business the loan it needed."
PPP Loan Details
Paycheck Protection Program (PPP) Loan Eligibility Requirements
The government wanted to get money in the hands of small businesses immediately, so they made the eligibility requirements simple. Most small businesses, non-profits, sole-proprietors will qualify. Requirements for eligibility include:
Your business (or nonprofit) was in operation as of February 15, 2020
You’re an independent contractor or sole proprietor, or your business/organization has employees or independent contractors for which you have associated payroll costs.
2nd Draw PPP Loan Eligibility Requirements
The requirements for a 2nd PPP Loan are very similar to the first with the following added elements:
You must have used your entire 1st PPP loan
You can show a 25% or greater reduction in gross revenue (sales)
Your business is still open and operational
You have no more than 300 employees (or per location, for businesses with multiple locations)
No Fees Charged to Get a PPP Loan
Everfund will not charge a fee, you won't pay any fees to any bank or lender, and the SBA is waiving all typical SBA fees. This means we will work at not cost to you to provide expertise and ensure you get the maximum loan, and the maximum forgiveness.
Caution: The government has mandated that lenders and brokers cannot add origination fees. Do NOT work with anyone who is asking for money to process or facilitate your PPP loan.
Applying to More Than One Lender
The Payment Protection Program (PPP) has been chaotic, to say the least. And many lenders are unable to handle all the requests or even respond to applicants. It can be frustrating, and in some circumstances you may have to apply to a second lenders. That said, it is best to not apply with more than one lender. Doing so can cause confusion with one lender trying to register your loan with the SBA without your knowing, preventing you from obtaining a loan with the other.
Most importantly, be aware that you can only get one PPP loan, and applying for more than one can lead to the SBA flagging your personal record for fraud.
PPP Loan Application Requirements
These loans are different from most types of loans. Some very unusual and attractive features include:
No credit checks
No personal guaranties
You can have other debt, including other SBA loans
No review of P&Ls or business financials (for 1st PPP Loans)
To obtain a loan, there is some paperwork, including an application, proof of payroll costs (such as IRS 940 and payroll reports), verification of identity, usually a tax return, proof of ownership structure and headcount. It's best to work with an expert to help prepare and submit the right docs to increase your chances of getting a loan without delay or denial. All Document Requirements
What Can PPP Loans be Used For?
PPP loans are intended to help small businesses and sole proprietors maintain payrolls - or self-pay - plus continue to be able to make other payments for things like rents and utilities. Specific allowable uses of PPP loans are:
Payroll costs: compensation in the form of salaries, wages, commissions (or similar compensation), cash tip payments (or the equivalent)
Healthcare costs: Any costs related to the continuation of group healthcare benefits, including insurance premiums
Mortgage interest payments (interest, but not principal)
Interest on any other debt incurred before February 15, 2020
Calculating PPP Loan Amount
1st PPP loans are calculated based on 2.5 times your monthly payroll costs. For 2nd PPP loans, hospitality businesses (restaurants, hotels) can qualify for a larger loan - 3.5 times monthly payroll.
Payroll costs include compensation, along with other payroll-related costs like retirement payments, state and local taxes on payroll, payment for vacation or paid leave, group healthcare costs, and allowances for separation or dismissal.
Note: when calculating compensation, gross pay over $100,000 for you or any employee is excluded.
For Independent Contractors and Sole Proprietors:
With No Employees:
Your 2019 Schedule C gross earnings (line 7) is your 12-month wages. Divide by 12, and multiply by 2.5. You are capped at $100,000 in earnings, so the maximum loan amount is $20,833
Your 12-month wages (see above) is added to the payroll costs for your W-2 employees.
PPP Loan Forgiveness
This is one of the most powerful parts of this loan program. Free money. When used for allowable expenses, these loans become grants not requiring repayment. Yes, up to 100% of the loan amount can qualify for forgiveness. This is important, so we'll provide more detail below.
Using Your Loan for Costs Eligible for Forgiveness
The loan forgiveness is based on costs incurred and payments made in the first 24 weeks after the loan is made. You can spend money on payroll costs, mortgage interest, rent or utilities. However, there are requirements for how this money is spent. Specifically, no more than 40% of the amount forgiven can be for non-payroll costs. There is also a calculation based on how many employees were let go and how many re-hired. There is some math here that is not simple, so consult an expert to ensure you get the maximum forgiveness possible. Some additional details are here.
Interest Rate and First Payment Date
For any loan amount that is not forgiven, the interest rate on the loan is 1% and the first payment will be due ten (10) months after the loan is made. Interest, though small, does accrue during that period.