5 reasons to apply for a PPP loan
- 1 5 reasons to apply for a PPP loan
- 1.1 PPP loan logistics
- 1.2 5 reasons why you should apply for a PPP loan now
5 reasons to apply for a PPP loan
If your business suffers losses due to forced work stoppages and stay-at-home orders, you may be eligible for a Payroll Protection Plan (PPP) loan. As of December 27, 2020, Congress has approved the provision of additional funds for PPP until May 31, 2021 or until the funds are exhausted. Fundbox no longer accepts PPP applications, but SBA can help you find PPP lenders.
PPP loan logistics
This PPP loan Provide funding for small businesses and independent contractors to cover their wage costs for eight weeks from the date of funding. The appeal of a PPP loan is that as long as your business meets certain criteria, it may be forgivable-which means you don’t need to repay it.
Here are some key facts:
- Eligible companies can get 2.5 times the average monthly salary cost, up to 10 million U.S. dollars
- The interest rate is very low, only 1%
- As long as you spend 75% of your money on payroll costs, the loan may be forgiven
Learn more about PPP loan eligibility and requirements here.
5 reasons why you should apply for a PPP loan now
If the following situations occur, please consider filling out the application immediately:
1. Your business needs financial assistance
If your business income drops due to closure or reduced customer demand, PPP loans can help you save money and Protect your employees.Not only can you keep all employees on the payroll–or Replace your compensation If you are a sole proprietor, you will also get help paying your mortgage, rent, and utility bills.
This is an uncertain period, but having funds can help you get through the slower period and keep your team intact as the economy gradually begins to reopen.
2. Your business is still open and operating with a certain capacity
In the past few months, many companies have been forced to close down, but some companies are still operating, even if their work capacity has declined. If your business is essential, or you are still operating to some extent, then you may be in a better position to stay in business and slowly increase your income until it returns to normal.
At the same time, PPP loans can provide you with cash flow The flexibility necessary to continue to serve customers.Use the loan funds for salary expenditure, rent and utilities, allowing you to freely allocate the income you bring to other basic costs, such as inventory and Marketing.
3. Your management costs are very low
Because PPP has strict regulations on usage, loans may not provide sufficient financial flexibility for companies with high administrative costs.However, if your operating costs are lower-for example, because you are an independent contractor, or your employees Virtual work— You may be more likely to benefit from the forgiveness clause of the loan.
For example, suppose you are a self-employed graphic designer whose regular expenses include website subscriptions and Wi-Fi; you can allocate 100% of the PPP funds to your salary compensation, and the loan may be completely waived.
4. Your state or county has issued guidelines for reopening
States and counties New guidelines and timetables are being issued across the country Reopen enterprise. Depending on where you do business, you may need to submit a safety plan to your county for approval. Adjust your offering, Serve fewer customers, or reschedule your Shop Or office to meet physical distance requirements.
If your business is eligible to reopen according to the regulations of your state and county–and You are ready to start in the next few weeks-getting a PPP loan can help you Reopen on the correct note. Injecting funds may allow you to allow employees to recover from vacation, preserve your business space, and resume operations for at least the first few months, and have more breathing space.
5. You have already applied and there is no response
If you apply for a PPP loan through a bank but are unsuccessful, you may be allowed to apply in a different way LenderLarge banks have been overwhelmed by PPP loan applications; therefore, many banks prioritize companies with greater financial needs, ignoring smaller companies and independent contractors. You are No more than one PPP loan is allowed, So once the lender approves you, your application elsewhere will be rejected.
Disclaimer: Fundbox and its affiliates do not provide financial, legal or accounting advice. This content is for reference only and is not intended to provide and should not be used as a basis for financial, legal or accounting advice. You should consult your financial, legal or accounting advisers before making any transactions.