PPP for Small Businesses: 5 Things You Need to Know

Initially established by the CARES Act in March 2020, the Paycheck Protection Program (PPP) provides forgivable loans to small businesses and nonprofit organizations to provide relief from the challenges of the pandemic economy. 

The program was highly criticized in its first iterations because it did not effectively help the smallest of the small businesses that were suffering the most due to pandemic shutdowns – such as your neighborhood coffee shop, family-owned restaurant, salon or other Main Street business. The first round of PPP funding also served a very low proportion of minority- and woman-owned businesses. 

Legislators have updated the program multiple times since the first iteration to ensure that the smallest and most vulnerable businesses do not get shut out from receiving the benefits. They also removed some of the roadblocks faced by entrepreneurs in early versions of the program and, most recently, the application deadline has been extended from March 31 to May 31. 

If you are a small business owner who does not think applying for a PPP loan is worth your time, ECDI urges you to think again. As long as your business was in operation prior to February 15, 2020 and you properly filed your taxes, there’s a good chance you are eligible to receive some forgivable funding.

Forgivable PPP loans are now more accessible to small businesses than ever before. Here are five reasons small business owners should apply:

1. The loan is forgivable.

PPP loans are fully forgivable if you provide appropriate documentation and meet the forgiveness requirements. At least 60% of the loan funds must be used for payroll costs, while the other 40% can go towards for a range of business expenses, including mortgage, rent, utilities, continuation of employee benefits and interest on other debt obligations (learn more). If you spend your funding on eligible expenses within your loan term and follow all designated SBA guidelines, you will not be required to pay back the loan. 

2. Loan terms are favorable.

During your 8- to 24-week PPP coverage period, you’ll document any expenses covered by the loan. Once that period ends, you’ll have a full 10 months to file for forgiveness. Even if you are unable to fully meet the forgiveness requirements for the entire loan, SBA may still forgive part of the loan based on the guidelines – it’s not all or nothing. The loan matures at a low 1% interest rate over five years, so you have time to repay if part or all of your loan is not forgiven. 

3. There are fewer roadblocks and higher loan amounts, as of March 2021.

Here are some of the roadblocks that have been removed since the advent of the program:

  • The program previously denied business owners with student loan delinquency. This restriction has been lifted, so you can now reapply if your documentation was previously denied.
  • The eligibility requirements were clarified so that non-citizen small business owners who are U.S. residents can apply for PPP with an Individual Taxpayer Number (ITIN).
  • Entrepreneurs with non-fraud felony convictions are now eligible to apply. 
  • Nonprofits including churches and veterans’ groups are now eligible.

Furthermore, the SBA now allows net profit or gross income to be added to your payroll expenses to determine your max loan amount. Because of that, businesses with few employees or small payroll costs are eligible to receive a larger loan than before. (Check out ECDI’s worksheets for calculating your loan amount.)

Finally, the deadline to apply has recently been extended, so you have time to get your app in.

4. You can get help with your application, at no cost.

PPP is ultimately built to energize small businesses in a difficult economy – but, to many business owners, the required paperwork and documentation may feel more like a hurdle than a boost. That’s where a small business support center like ECDI can help. In addition to robust online resources, we provide one-on-one assistance (from a real person) to help you with the application process and make sure you follow the right steps to assure your loan is forgiven. 

On ECDI’s website, you’ll find all the resources you need: application steps, calculation worksheets, eligibility requirements, deadlines, and a dedicated help hotline. 

5. You’re leaving money on the table if you don’t apply.

Small businesses have a lot to gain from participating in this program. The money provided exists specifically to get small businesses the capital they need to get back on track. Your business may be leaving money on the table if you do not consider applying. 

All small business owners need to give the PPP application a look. Don’t miss an opportunity for a potential financial boost to your company. Find all the details and fill out your application on our website.

The application deadline is May 31, 2021 – so get moving!

ECDI PPP Resources

This mutli-part sponsored series highlighting ECDI’s work in Columbus is presented with paid support by ECDI.

Since 2004, ECDI has assisted Ohio’s entrepreneurs through its one-stop shop business services model, suited to meet the needs of all entrepreneurs, regardless of what business stage they’re in. From providing capital to entrepreneurs looking to expand their businesses, to providing focused, business-specific educational opportunities to enhance entrepreneurial skill sets, ECDI works with their clients to meet their unique needs. Whether assisting a new client with a business concept or an accomplished entrepreneur opening a fifth location, ECDI’s “never say no” approach has allowed over twelve thousand entrepreneurs to take advantage of the services it provides. Visit ecdi.org today to learn more.