New Paycheck Protection Program: limit, amount and how to apply
The PPP loans have been changed to help small and minority-owned businesses access the financial support. But how do you get the loan and how much could you receive?
President Joe Biden has announced a series of alterations to the Paycheck Protection Program (PPP) that he hopes will make the forgivable loans more accessible to small businesses.
The program was first introduced by the Trump administration but was criticised for making it too difficult for smaller and minority-owned businesses to access the support.
Biden has removed an eligibility requirement that saw small businesses who do not make a profit unable to receive a loan, while there was no such stipulation for larger businesses.
Also removed from the PPP is a restriction that prevented business owners with prior non-fraud felony convictions from applying for a loan. In some cases this saw businesses denied the vital support because the owner had outstanding federal student loan repayments.
Biden said of his administration’s new focus on small businesses: "Small businesses are the engines of our economic progress. They're the glue, and the heart and soul of our communities. But they're getting crushed.”
How much can I get in the PPP loan scheme?
As mentioned, the PPP scheme was introduced by Trump and aimed to provide a mechanism for small businesses to continue to pay their workforce throughout the pandemic. In December’s emergency relief bill $284 billion of federal funding was added to the program, yet only half of it has been spent so far.
In total $134 billion worth of forgivable loans has been paid out to 1.8 million small businesses who were struggling to pay wages. This works out at an average loan size of around $74,000, which could be the difference between a business surviving and going under.
The maximum amount that you can claim is $2 million, but there are other limits for eligibility. The funding can only be used to fund salaries worth up to $100,000 per year. If your employees make more than that they can only receive up to $100,000 in support, on a pro rata basis.
How to apply for the Paycheck Protection Program
Alongside the changes to eligibility requirements, Biden announced the introduction of a 14-day window during which only small businesses can apply for the support. From Wednesday 24 February to Wednesday 10 March, only sole proprietors and businesses with fewer than 20 employees will be offered loans by the Small Business Administration (SBA).
The actual process to apply for a PPP loan is fairly straightforward, although it does vary slightly depending on whether or not you have received one before.
You first have to find a lender, which can be done through a portal on the SBA website. To find potential PPP lenders who offer the SBA-backed funding you can either Get matched with a lender or Search for lenders in your area.
Once you have found a lender you then apply for a loan of the size you require, which can also be done online. If you have not received a PPP loan before you can apply for First Draw PPP Loans. Business owners who have received one in the past but need further support must apply for Second Draw PPP Loan.