Here are five myths about the PPP – and some information that could help to clear up any misconceptions before the clock runs out. Although many lenders have reopened their PPP application portals, some small-business owners are still sitting on the sideline, having doubts about whether the program is right for them. They might not know if they qualify, and they might have concerns about the process related to loan forgiveness.
MYTH #1: The PPP is just for big businesses. MYTH #3: My business probably won’t meet the credit and eligibility requirements.
FACT: If you run a business, even as a sole proprietor or an independent contractor, you may be eligible to apply for a PPP loan. Meet with your business banker to discuss your options and eligibility.If your business has filed a 2019 or 2020 tax return (Form 1040 Schedule C for 2019 or 2020 for independent contractors), you can apply. Those without employees will need to submit IRS Form 1040 Schedule C to report your net business income. FACT: If your business was in operation Feb. 15, 2020, you have already met a key eligibility requirement. From there, you will need to provide documentation showing that you were in business and demonstrating payroll.
MYTH #2: I can only get the PPP if I have employees. FACT: If you’re considering your first PPP loan and have fewer than 500 employees, you’re eligible for a PPP loan. In fact, even if you have no employees, the program may be available to you (see myth #2).As of August 2020, 75% of businesses that had received PPP loans had nine or fewer employees, according to the U.S. Small Business Administration (SBA). Furthermore, nine out of 10 loans were for $150,000 or less.
MYTH #4: If you have other SBA financial assistance, you can’t get a PPP loan. Small businesses owners may also worry that their credit status could keep them from getting a PPP loan. Although you will apply through a lender, there is no credit check requirement when applying for a PPP loan.
MYTH #5: The forgiveness process is complicated and won’t apply to my business. And, while each program has its own requirements, don’t let the idea of applying for one loan sway you from applying for the other. Now is the time to use all the resources available to you. Just make sure you follow the guidelines of each program and maintain your documentation on how you’re using each loan. FACT: Business owners can apply for the PPP and other SBA financial assistance (including the Shuttered Venue Operators Grant), such as the Economic Injury Disaster Loan (EIDL) and Section 7(a) loans. However, you can’t use your PPP funding and your EIDL loan for the same purpose, such as payroll. Note: An EIDL loan must be repaid.
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