Are you a small business owner? Recession is taking over the economic world and it must be getting hard for you to sustain your business. Have you heard about PPP loans? We have all the information about it here, for you!
In 2020, the Paycheck Protection Program also known as PPP Loan, was developed by the Trump Administration as a part of the CAREs Act. Looking at the ongoing situation due to COVID-19, the main aim of the program was to support small business owners and help them survive the chaos.
Now, you’ve got an idea of exactly what is a ppp loan. Let’s discuss some crucial parts of it.
It had two rounds of funding initially. The two rounds were estimated to fund around $300 billion each which surprisingly got over within weeks of initiation of the program.
However, 2021 saw a comeback of PPP which revived many American small businesses, with its fund of approximately $284 billion. Unfortunately, PPP loans had been discontinued. Hence, no application would be acknowledged after May 2021.
In case you already managed to get it while it was still available, we have everything that you need to know about it. Starting from the ppp loan meaning to what does it do?
What is a ppp loan? As we have discussed, PPP Loan was launched to help small business owners to sustain their businesses in tough times during COVID-19. However, the primary goal of the plan was to use it as a payroll and become a Paycheck Protection Program.
In its third and last round of rollout, it had 3 funding categories which are as follows:
- First Draw Loans: This was for the people who couldn’t get a chance to apply or didn’t qualify in the first two rounds.
- Second Draw Loans: This is for businesses that require extra funding. It applies to owners who got funds in the previous rounds. However, they might have experienced a bad year. Hence, they can apply for a second chance with $2 million as the maximum amount of loan.
- Special Cases: This is to fulfil the possibilities of owners who either returned their first loan or couldn’t get a sufficient amount.
As we’ve learned the meaning of a PPP loan and how it works. Here are some guidelines that one should know about it.
- it comes with a guarantee of no application charge to be asked by either the government or lenders.
- In return, There’s no requirement for any collateral or personal guarantee.
- Loans are pardonable only if you keep a justifiable record of fund spending and apply for loan forgiveness anytime until the loan matures.
- If given before June 5th 2020, the loan would mature in 2 years. However, it would take 5 years for it to mature if submitted after it.
- There is a fixed 1% interest rate on PPP loans.
Check out who is eligible to apply for the PPP Loans.
- Most Businesses with fewer than 500 employees.
- Independent news organisations and contractors
- Owners who could prove a decrease of 25% in revenue during a single quarter of 2020
- Businesses operating before 15th Feb 2020.
Source: https://www.accountiod.com
