The deadline for small businesses to apply for a Paycheck Protection Program (PPP) loan has been extended until May 31, 2021!  The program was supposed to end on March 31st, but the deadline has been extended so that more small businesses can apply for either a first or second PPP loan. 
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The PPP loan program was created to help small businesses during the COVID-19 pandemic. And it is not really a loan, because as long as a business spends it on eligible business expenses (like payroll, rent, and utilities) and retains its employees, the PPP does not have to be paid back. No collateral is required to get a PPP loan, and lenders are not allowed to charge small businesses any fees for getting the loan.
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Most small businesses, including sole proprietors, independent contractors, and self-employed individuals, are eligible for a PPP loan. And if you received a PPP loan last year, you can receive a second PPP loan if your business has had a drop in revenue.­
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My business did not receive a PPP loan in 2020. Can I apply for one now?

Yes. Corporations and LLCs are eligible to receive a loan of 2.5 times their average monthly payroll from either 2019 or 2020.

Businesses that file IRS Form 2040, Schedule C, such as sole proprietors, independent contractors, and the self-employed, are eligible for up to $20,833 if they have no employees. With employees, they are also eligible to receive 2.5 times their monthly payroll.­

I am a sole proprietor/independent contractor/self-employed and I file my taxes using Form 1040, Schedule C.­ I was turned down last year for a PPP loan. Am I now eligible for a PPP loan?

Probably. The eligibility criteria for sole proprietors, independent contractors, and the self-employed has changed and now uses gross income from your Schedule C instead of net income. This change allows more Schedule C filers to qualify for a PPP loan.­­

Note: The new PPP applications for Schedule C filers using gross income are very new, so some banks might not be able to accept these applications yet. But banks should have them available this week. Keep checking with your bank to see when their loan portal will open for Schedule C filers who want to apply for a PPP loan using the new application.

My business got a PPP loan in 2020. Can I now apply for a second PPP?­

Yes, your business can receive another PPP of 2.5 times your average monthly payroll from either 2019 or 2020, but you must demonstrate that your business had a 25% reduction in gross revenues from 2019 to 2020.­ This is calculated by comparing your company’s gross receipts from any one quarter of 2020 to the same quarter of 2019, or you can use your company’s 2020 tax return as compared to the 2019 return. You also must have spent your first PPP loan on eligible expenses.

Where do I apply for a PPP loan (first or second)?

Apply with the bank where your business has its checking account. Your bank will probably have an online portal where you can fill out the loan application and upload your supporting documents (like 941’s to show payroll).­ If you are not sure how to access your bank’s online portal, call them or visit their website.

What application do I use?­

Most banks do not accept paper applications, but their online portals will be very similar to the forms issued by the Small Business Administration. Before applying with your bank, you should review the application you are going to use so you are familiar with the eligibility and documentation requirements.­ The forms are:

  • Corporations and LLC’s applying for their first PPP loan: Form 2483.
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  • Sole proprietors and Schedule C filers applying for their first PPP loan: Form 2483-C.
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  • Corporations and LLC’s applying for their second PPP loan: Form 2483-SD.
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  • Sole proprietors and Schedule C filers applying for their second PPP loan: Form 2483-SD-C.

For more information, please visit the­ Small Business Administration’s website. For information on the forgiveness process for PPP loans, click here.