The Paycheck Protection Program, or PPP, was created by the United States during the Coronavirus pandemic and helped many businesses stay open and aid in paying their workers. In addition, it helped keep many companies, those who are self-employed, and some nonprofit organizations stay in business and use the funds for their workers or other financial needs. Getting a PPP loan can be a complicated process and requires proper steps to obtain one and know the proper way to use the funds.
PPP Loan Description
The PPP loan authorizes certain entities to implement the funds to pay for payroll, rent, interest, or utilities. It is a low-interest loan and is roughly two and a half times the average monthly payroll cost spent. In addition, there is a chance the loan may be forgiven partially or fully depending if the funds were used in a specific way to aid the business. Ultimately, this loan has helped keep people employed, and businesses remain in business. So, the next step is figuring out the PPP loan application process.
PPP Loan Application
The application process can be tedious but will be worth it if it helps keep employees paid and companies from closing entirely.
The first thing a business owner will want to do is gain access to the PPP application. They must send a request before filling it out. As the forms are being filled out, it will be essential to confirm the business information such as the address, the type of business, tax ID, the requested amount, and the number of employees. They are then adding all the new requirements for the business information. All of it should be accurate and show the business state date and what is the specific industry.
The following steps for the application would be to confirm ownership of the business and enter any additional owner information if needed. Once that is completed, the documents such as the owner’s driver’s licenses, payroll documents, and certain tax documents should be uploaded. Once that is done, and everything is finalized and sent in, all left is to continue to check email for any additional instructions.
The wait may feel like forever, but once the application is accepted and the amount is approved, it will be important to plan how to use the funds. This way, the chance of the loan being forgiven will be higher.
PPP Loan Fund Usage
As stated earlier, in order to get a PPP loan forgiven, the funds need to be spent in specific ways. However, there are certain guidelines that a business can follow to make this happen.
The primary use of these funds should be used for payroll, but there are other ways a business can utilize the loan money. An example of this would be a mortgage or rent payment and utilities. However, the main focus should be on payroll expenses. These expenses can include fulfilling an employee’s salary or wage, tips or commissions, paid leave, separation pay, or the cost of benefits for the employee.
If the funds are used this way, the chances of the loan being forgiven will rise dramatically.