The Paycheck Protection Program: Where It Stands Now and How to Apply for a Loan

The Paycheck Protection Program (PPP), by which the federal government approved loans for small businesses hit by COVID-19, ran out of money on April 16.

The Small Business Administration (SBA) posted a note on its website saying it is no longer accepting new applications for the loans, which can total up to $10 million and go out to businesses with 500 employees or fewer. (See “What is the Paycheck Protection Program?” below for more basic information on these loans.)

The program’s operations are stopped until Congress makes more money available. While both political parties agree the program needs more money, they can’t agree on how to distribute it. Some policy reporters estimate the process could stretch into May.

In the meantime, business owners struggle. We’ll explain what you need to know below.

What if I’ve already applied for a loan through the Paycheck Protection Program but haven’t gotten money yet? 

If you’ve already applied for a loan, it’s likely the process is stalled for the foreseeable future.

In the PPP, private banks accept loan applications. However, the federal government’s SBA must approve your application before your bank hands over the cash, explains the Washington Post.

On Wednesday, as the program’s funds dwindled, the SBA said it wouldn’t be able to legally approve any more loan applications if the program and others like it were to run out of money.

“By law, the SBA will not be able to issue new loan approvals once the programs experience a lapse in appropriations,” the administration said in a statement.

As of Wednesday, banks had hundreds of thousands of loan applications still pending, Politico reports. One large bank told CBS it had tens of thousands awaiting SBA approval.

This leads us to conclude that those completed loan applications are left hanging in the balance until Congress adds more money to the Program.

How many Paycheck Protection Program loans have been given out so far?

The SBA said it has approved more than 1.6 million loan applications since the Paycheck Protection Program launched on April 3. That’s more than 14 years’ worth of its usual loan volume. Business owners submitted those applications via 4,900 separate financial institutions (big national banks, small local banks and more).

But most haven’t seen their money yet.

“While that money has been approved, most borrowers are still waiting for those loans to be funded — and for money to even show up in their accounts,” CBS reported on Thursday.

The government hasn’t reported a number, but stories from both banks and business owners suggest only a few loan applicants have actually gotten their cash, per the Washington Post.

On Wednesday, Chase Bank posted a note from its CEO of business banking, Jennifer Roberts.

“By tomorrow morning we will have notified all of our customers who received funding in the first round [of PPP loan applications] and know many of you are disappointed, as are many other business owners around the country,” the note said.

Can I file a new application for a Paycheck Protection Program loan right now?

Yes, but the SBA won’t process it until Congress adds more money to the program. Most national banks are still intaking loan applications. However, as noted above, the SBA has stopped processing applications, meaning your application will be stuck in the submitted phase.

Here’s the status of national banks’ application programs. (Note that many are only accepting applications from folks who already bank with them):

• Wells Fargo is accepting applications for PPP loans from folks who have a business account with Wells Fargo “in anticipation of additional approved funds” for the program, per its website. The bank promises to keep applicants updated via email after they file.
• Citi is also still accepting applications from existing clients and says it will keep them on file for 30 days in the event the PPP gets more funding. However, “there can be no assurance that additional funding will become available,” the page notes.
• Bank of America continues to accept applications from folks with whom it has had checking or lending relationships since Feb 15. Follow-up on applications will “occur online and through email,” the site states.
• Chase Bank isn’t accepting applications right now.
• US Bank isn’t accepting applications right now either. “… Our priority now is to continue moving existing PPP applications through the process up to the point of SBA submittal,” says its website.

When will money for these loans be available again?

The program will get more money when Congress can come to an agreement about how much to allocate and how to disperse it.

There was a smidgen of hope that Congress would do so during a brief session on Thursday afternoon, but no such luck. Vox reports that for business owners, the waiting game could last until May.

The mechanics of the timeline for getting more funds is very political, as detailed in the news. The bottom line: Both political parties want money to be added to the program; they just can’t agree on how to get it there. An agreement is going to require more talks and time.

Is this lack of loans hurting other businesses like it’s hurting mine?

If you’re feeling frustrated and your business is strapped while you wait for a loan, you’re not alone. Anecdotes abound of businesses having filed applications but not yet receiving cash.

One hotelier told CBS that, since filing multiple loan applications for his various properties, just “a small fraction” of the applications have been approved, and none are funded. The owner of three hair salons in the Carolinas got approved for a $107,000 loan but already had to lay off all of his employees.

Some companies have had success, however. Yahoo Finance told the stories of four businesses that have received PPP loans — ranging from $83,000 to $201,0000 — and noted that each applied at a small, local bank vs. a larger institution.

Conversations on Twitter were largely political on Thursday, though business owners were still expressing frustration with the application process at large banks.

“America’s small businesses are on the brink, trying desperately to keep their doors open and support their employees,” Brad Close, president of advocacy group the National Federation of Independent Business, said in a statement.

Close’s organization, along with other lobbying groups, banks and coalitions of businesses, are asking members of Congress to add funds to the PPP quickly.

Now that the Paycheck Protection Program is stalled, where else can I get a loan?

The federal government doesn’t seem like the best source right now. Another program, the SBA’s Economic Injury Disaster Loans, was stalled on Thursday along with the PPP.

We recommend consulting our rundown of all resources, including loans and grants from state and city governments, nonprofits and private companies.

What is the Paycheck Protection Program?

Under The CARES Act signed into law on March 27, small businesses in the U.S. have access to $350 billion in loans under the Paycheck Protection Program (PPP), a new federal loan program designed to help companies and their employees sustain the economic challenges of COVID-19.

The PPP provides low-interest, federally-backed cash-flow assistance in the form of loans to small businesses in the U.S. and its territories. Some important details:

The government will fully forgive the loans “if all employees are kept on the payroll for eight weeks and the money is used for payroll, rent, mortgage interest, or utilities,” says the SBA. “Forgiveness will be reduced if full-time headcount declines, or if salaries and wages decrease.”

In the event your business does end up being required to repay a portion of its loan, you can get a deferral on loan repayments for a minimum of six months and up to a maximum of one year, per The Tax Foundation.

Businesses with under 500 employees, which include sole proprietorships, independent contractors and others, can apply for PPP loans if their business was or is affected due to COVID-19 between Feb. 15, 2020 and June 30, 2020.

Some of our favorite sources for more basics on PPP loans:

The SBA’s overview of the Payment Protection Program

Fast Company’s guide to the Payment Protection Program

Who is eligible for Paycheck Protection Program loans?

Here are the general eligibility requirements to apply for a PPP loan:

• A business or nonprofit with under 500 employees, or one that meets the SBA’s size standards for a small business
• An individual who operates as a sole proprietor, independent contractor or is self-employed who regularly carries on a trade or business
• A Tribal business that meets SBA size standards

 Special additions to the eligibility requirements:

• For accommodation and food service sector, organizations with the NAICS code NAICS 72 (i.e. hotels, restaurants, casinos, restaurants and bars), the “under 500 employee” rule is per location.
• Franchise operators or those that receive financial investment from a Small Business Investment Company (SBIC) are also eligible.

What can I use the loan for?

The loan can be used for the following items:

• Payroll, including salaries, commissions or similar compensations
• Continuing health care benefits
• Mortgage interest payments
• Rent
• Utilities
• Interest on any other debt obligations

How much money can I get from a Paycheck Protection Program loan?

The size of your potential loan depends on payroll costs. Eligible businesses will get loans of up to 2.5 times their average monthly payroll costs in 2019, up to $10 million. For example, if your payroll costs in 2019 were $10,000 per month, you will get a $25,000 loan (10,000 x 2.5).

There are several online PPP loan calculators that help businesses define estimated loan totals and forgiveness.

When and where do I apply?

Aside from the national banks mentioned above, you can file an application with other of the program’s certified lenders, which include local banks and other lenders who process SBA 7(a) loans.

Because most large banks are only accepting applications from folks who currently bank with them at this point, we suggest applying for a PPP loan through the firm you usually bank with. You can also visit the SBA’s site to find eligible PPP lenders in your area or use this listing of local lenders that often process SBA 7(a) loans. To determine how to submit your loan application at a local lender, check their website or call them up.

What information do I need to apply?

During the application process with your PPP lender, you’ll need to fill out the Paycheck Protection Program Borrower Application Form.

The simple form should take less than 20 minutes to complete, as long as you have all the required information ready. Here’s what you need:

 I. General info

• Business legal name
• Business address
• Business taxpayer identification number (EIN, SSN)
• Primary contact (business phone and email address)

 II. Payroll Calculation

• Average monthly payroll
• Number of employees

To see what applies as an eligible payroll expense, review this breakdown from Tax Foundation, a leading independent tax policy nonprofit.

This post was originally posted on the NetSuite Blog. By Justin Biel, trends editor at Grow Wire.

Visit our NetSuite Learning Center to take advantage of educational whitepapers, eBooks, webinars and to stay up to date on the latest in NetSuite best practices.