Here’s How to Land a PPP Loan for Your Small Business

The American Rescue Plan Act of 2021, signed into law by President Joe Biden on March 11, has allocated an additional $7.5 billion to the Paycheck Protection Program (PPP). If you’re a small business owner who has been financially impacted by COVID-19, you have until May 31, 2021, to apply for a PPP loan. The process is straightforward and can be completed in just five steps.

Get Matched with a Lender

To begin the process, visit the U.S. Small Business Administration (SBA) website, where you’ll find two helpful links. One link will help you locate lenders in your area who offer PPP loans, while the other will match you with a lender.

While there is no official minimum credit score required to qualify for a PPP loan, some lenders may conduct a credit check during the application process. If you’re concerned that your credit score is too low, consider asking the lender two important questions:

  • Do you plan to run a credit check?
  • If so, what is the minimum credit score required to qualify for a PPP loan?

If you find that a credit check is a barrier, it may be worthwhile to shop around for a lender who does not run a credit check.

Complete a Loan Application

Similar to any loan application, a PPP loan application asks for basic information such as your name and home address. Additionally, you’ll need to provide specific details about your business, including:

  • Business address: Use the five-digit zip code instead of the nine-digit one.
  • Type of business: Select the appropriate type and double-check your selection. The required supporting documents will depend on the type of business you own.
  • Tax ID: Verify that you have entered the correct nine-digit Tax ID number.
  • Loan amount requested
  • Date your business first started: Ensure you use the same date you filed with your Secretary of State.
  • The industry your business falls under: If you don’t see an exact match, choose the closest option.
  • Number of employees: Remember to count yourself as one.
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Confirm Ownership of the Business

The application will prompt you to indicate the percentage of the business you own. If you’re a sole proprietor, the answer is 100%. For co-owners, you’ll need to provide information about any individual who owns 20% or more of the business. As a co-owner, be prepared to provide a copy of each owner’s driver’s license (front and back).

Upload Supporting Documents

Here is a list of the documents that may be requested:

For Business Owners:

  • 941 quarterly tax filing or 944 annual tax filing
  • Payroll register for the previous 12 months
  • Bank statements for the previous 12 months

For 1099 Independent Contractors or Self-Employed:

  • IRS 1040 Schedule C
  • 1099s received from clients
  • Last year’s income and expense reports
  • Bank account statements for the previous 12 months

Sign Loan Papers and Wait for Funding

Once you have completed the necessary steps and submitted your application, your lender will provide you with an estimated timeline for processing. As long as you promptly provide any requested documentation, your loan may be approved in as little as three days. Once approved, you will be required to sign the loan papers.

According to the SBA, PPP loans must be funded within 10 calendar days of approval. While some lenders may take slightly longer, most aim to meet or beat this deadline. If your business is facing financial challenges, a PPP loan can serve as a valuable lifeline until things stabilize. To ensure a smooth application process, gather all necessary documentation and carefully review your application before submission. Errors or omissions may delay the approval and disbursement of funds into your bank account.

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For more financial tips and advice, visit Simple Money Tips – Steps To Financial Freedom. Remember, applying for a PPP loan is a proactive step towards regaining control of your business’s financial future.