State agencies such as the Federal Small Business Agency (SBA) have provided incentives to companies to alleviate the crisis caused by the coronavirus. But among so many options Hispanic Entrepreneurs explain to you how and where to apply to the PPP Loan.
What is the PPP Loan?
The Payment Protection Program is a mechanism that provides emergency funds to small businesses. To pay expenses such as payroll and rent. You get this loan through the Federal Small Business Agency (SBA). It is designed to provide relief or incentives for small businesses to keep their employees on the payroll.
Businesses with 500 or fewer workers currently qualify. That they have operated since February 15, 2020 and that have been affected by the covid-19 crisis.
Borrowers requesting money for the first time can request 2,5 times the average monthly cost of their payroll. With a limit of up to 10 million dollars; In the case of sole proprietors, the loan can be 2,5 times the earnings declared on tax form C.
Second loans are limited to $ 2 million, and are intended for companies with 300 or fewer employees. Useful for food service and lodging businesses that can request 3,5 times their average monthly payroll, but with the limit of 2 million dollars.
The loan can be forgiven if they follow the rules of the program. And at least 60% of the money has to be used to pay the payroll of employees. Those that are not forgiven have an interest rate of 1% and a repayment term of 5 years.
How and where to apply for PPP Loan
The SBA announced that el Payment Protection Program (PPP). Has granted $ 5.2 million in loans to America's small businesses, this translates to supporting 51 million jobs.
The process reopened on January 11, 2021 for existing and new borrowers, and closed on March 31. But another was opened for those who opt for a second loan until May 31.
Small businesses, non-profit entities with fewer than 20 employees, and sole proprietorships. They had the right to request second loans from February 24 to March 9; The program is open to all eligible companies from March 10 to May 31, 2021.
Second PPP loans
A borrower is eligible for a second loan if they received a first PPP loan, have fewer than 300 employees, and can demonstrate a 25% reduction in their gross income between comparable quarters in 2019 and 2020.
Second loans can be used to finance payroll, payment of interest on mortgages, rent, utilities, protection of workers against covid-19. As well as for uninsured property damage costs in the event of looting or vandalism in 2020.
You can apply for the loan through any lender or bank authorized by the SBA. Participating credit union or agricultural credit union. You should refer to the SBA “Lender Match”.
The requirements vary according to the lender, but generally you must state:
1-IRS Form 940 (from the year 2019 and 2020).
2-IRS Form 941 (from the year 2019 and 2020).
3-Business Tax 2019.
4-Payroll reports.
5-Company formation documents.
6-Bank statements 2019.
7-Bank statements 2020.
For independent contractor or business without employees:
1-Business Fees 2019 with Schedule C.
2-Bank account statement.
3-Evidence that the business has been operating as of February 15, 2020.
It should be noted that the first instances, the Federal Agency for the Development of Small Businesses, approved the requests immediately. But then they added more controls to prevent fraud and the allocation of resources can take a few days. If you know how and where to apply to the PPP Loan, tell us about your experience.
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