What is PPP Loan?

PPP stands for The Paycheck Protection Program. PPP is a kind of loan implemented for small businesses to keep their workers on the payroll. It acts as a lifesaver for small business firms. Under Paycheck Protection Program loan, the business gets a guarantee of eight weeks of payroll and other incentives to keep their workers and pay their bills as in for PPP loan.

For small business firms having a payroll of fewer than 10 million dollars or 2.5 times the average, they are applicable for the Paycheck Protection Program loan. The loan will be forgiven completely if the guidelines are properly followed.

The Small Business Administration (SBA) regulates the loan, and it was expected to renew with new funding from April 24, 2020.

How can you obtain Paycheck Protection Program Loan?

There are various guidelines the company needs to follow for the eligibility of PPP Loan. Besides, 100% of loans will be excused if all the criteria are followed. When it comes to numbers, a company will be a maximum of five hundred employees can apply for the loan.

The criteria are further broken down into,

  1. Business firms that come under “Accommodation or Food Services”, such as restaurants and hotels, are included. The employee size must be less than five hundred.
  2. The tribal business, running by a community, can also apply for The Paycheck Protection Program.
  3. Independent business who owns franchises with a small group of workers.
  4. Independent workers, self-employed, gig workers, and sole proprietors are also eligible for The Paycheck Protection Program Loans.

However, according to SBA, the PPP loan is applicable to those firms and workers who went live from April 10, 2020.

Parameters for PPP Loans

Applying and using PPP loans are constrained. The requirements and supporting documents vary from firms to firms and workers to workers.

Here is a detailed guideline about the same:

If you are applying as a

  1. A contractor or sole proprietor without payroll
    Supporting Documents: Utility statements, Rental, or Mortgages Agreement.
    Forgiven: Eight weeks of owner compensation agreement, rent, utilities if they are eligible in a business tax return.
  2. A contractor or sole proprietor with payroll
    Supporting Documents: Utility statements, Rental or Mortgages Agreement, a document proving your retirement and health insurance, payroll reports of 8 weeks.
    Forgiven: Eight weeks of owner compensation agreement, rent, utilities if they are eligible in business tax return, payroll expenses before COVID-19.
  3. A corporation or Non-Profit with payroll
    Supporting Documents: Utility statements, Rental or Mortgages Agreement, payroll reports of 8 weeks, a document proving your retirement and health insurance.
    Forgiven: Eight weeks of owner compensation agreement, rent, utilities if they are eligible in a business tax return.

If the PPP Loan is approved, the funds can be used as:

  1. Payroll includes salaries, wage, parental, health and family.
  2. Rent
  3. Utilities
  4. Mortgage Interest

How to account for PPP loan?

A firm or an individual needs to keep the record updated to make sure that the PPP Loan is forgiven. 1. 1. 1.

1. Separate Bank Account: Keep all the PPP loan funds and transactions in a separate bank account. It is easier to track all the expenditure.

2. Software and Apps: There are software and applications available which allows you to keep your record organized and accessible. You can keep an eye on your funds and transaction from anywhere.

Bottom Line

The Paycheck Protection Program is the best practice for small business firms since they can keep their workers on the payroll for a limited period. The PPP loans can be forgiven if you follow the guidelines properly. Go through the eligibility before applying for the loan and enjoy the best service from the government.


This will close in 0 seconds

    Please Submit Your Email

    This will close in 21 seconds

      Request Call Back

      This will close in 0 seconds

        Request Call Back

        This will close in 0 seconds