Guide to COVID-19 SBA PPP Loans

Under the CARES Act, the SBA is offering forgivable Payment Protection Program (PPP) loans to help small businesses under financial strain due to the COVID-19 pandemic.


Note: The program ended August 8, 2020.

Quick links:

Paycheck Protection Program (PPP)
Loan Highlights

Loan Size

Borrow 2.5 times your monthly payroll costs, including compensation and other payroll-related costs.


Most for-profit and non-profit businesses qualify. Must have 500 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. 


No credit check and no collateral required. No review of business financials or operating info. 

Loan Terms

No payments for 6 months, interest rate of 1%. If the loan is forgiven, no payments ever will need to be made.

No Collateral

Loans are based on your payroll and payroll-related costs only. No collateral is required.

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PPP Loan Details
Paycheck Protection Program (PPP) Loan Eligibility Requirements

The government wants to get money in the hands of small businesses immediately, so they've made the eligibility requirements very 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.

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 so many lenders are unable to handle all the requests or even respond to applicants. Given that, it is often in your best interest to apply to a second lender. This is particularly true if the first lender has not spoken to you directly or given you feedback to show that they reviewed your specific request thoroughly.

If you have applied elsewhere but received no feedback at all, we suggest applying with us. Just be aware that:

  • You can only get one PPP loan.

  • As soon as you receive approval from one lender, you should be prepared to withdraw your application from the other lender.

PPP Loan Application Requirements

These loans are different from most types of loans. Some very unusual and attractive features include:

  • No credit checks 

  • No collateral 

  • No personal guaranties

  • You can have other debt, including other SBA loans

  • No review of P&Ls or business financials

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

  • Rent

  • Mortgage interest payments (interest, but not principal)

  • Utilities

  • Interest on any other debt incurred before February 15, 2020

Calculating PPP Loan Amount 

Generally, PPP loans are calculated based on 2.5 times your monthly payroll costs. 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 net earnings (line 31) 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

  • With Employees:

    • 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. Given some of the details of the law, it can be helpful to talk to an expert to ensure maximum loan forgiveness.

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.

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 six (6) months after the loan is made. Interest, though small, does accrue during the six months.

© 2020 by Everfund Commercial Capital, LLC

Everfund Commercial Capital, LLC

2200 Wilson Blvd, Suite 102-38

Arlington, Virginia 22201

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