What Is the SBA Paycheck Protection Program (PPP) and How to Apply?


Updated 07/02/20

An additional $310 billion to fund the Paycheck Protection Program (PPP) has been approved by the Senate on April 21st and is expected to pass the House on Thursday, April 23rd. As a small business owner, if you missed the first $349 billion of funding, it’s important to contact your bank, credit union or approved SBA lender immediately to submit your application. If you already submitted, be sure to confirm your original application is still in the system.

If your business banking partner is a smaller, community bank, it’s important to know that $125 billion of this additional funding will be set aside to support smaller banks. Specifically, Community Development Financial Institutions (CDFI) who service smaller businesses, many of which are minority and women-owned businesses.

This federal program is part of the CARES Act (Coronavirus Aid, Relief, and Economic Security) that was signed by the President into law on March 27, 2020. The PPP is designed to help small business owners retain employees during the coronavirus pandemic.

This $2 trillion Coronavirus Stimulus Package Act provides much needed help to the U.S. economy which has slowed down during the Coronavirus pandemic. The CARES Act supports businesses and employees in the U.S. through a range of support options: a Paycheck Protection Program; direct payments to U.S. taxpayers; improved unemployment benefits; and financing to help struggling businesses across different industries nationwide.

In particular, the stimulus package offers financial support to small businesses. We outline some of the areas where small businesses can receive assistance with a focus on the Paycheck Protection Program Loans.

Paycheck Protection Program Loans

Under the stimulus package, the PPP is available to small and medium businesses with less than 500 employees via the U.S. Small Business Administration (SBA). The SBA is administering a Paycheck Protection Program loan for businesses to help maintain their staff and payroll and cover related costs during the Coronavirus pandemic.

The program provides cash-flow assistance through 100 percent federally guaranteed loans to employers who maintain their payroll during this emergency. The loans will be forgiven for employers who maintain their payroll and help workers keep their jobs. This in turn will help affected small businesses and our economy snap-back faster after the crisis.

The Paycheck Protection Program has a host of attractive features, such as forgiveness of up to 8 weeks of payroll based on employee retention and salary levels, no SBA fees, and at least six months of deferral (with maximum deferrals of up to a year).

Small businesses and other eligible entities are now able apply if they were harmed by COVID-19 between February 15, 2020 and June 30, 2020. This program would be retroactive to February 15, 2020, in order to help bring workers who may have already been laid off back onto payrolls. Loans are available through Aug 8, 2020.

Thousands of banks already participate in the SBA’s lending programs, including numerous community banks. You do not have to visit any government institution to apply for the program.

Call your bank or search online for SBA-approved lenders. You can also learn more about applying for an SBA loan directly on the SBA website. Below we provide answers to some of the most popular questions around the Paycheck Protection Program.

The U.S. Treasury website also has a detailed fact sheet. Download the PDF: PPP Fact Sheet


FAQ on the Paycheck Protection Program:

Q. When can I apply and is there a deadline for the Paycheck Protection Program Loan (PPP)??

Small businesses and sole proprietorships can now apply for and receive loans to cover their payroll and other certain expenses through existing SBA lenders (Most banks, credit unions and SBA-approved lenders)

With $130 billion still unspent as part of the Payment Protection Program, the Senate has cleared legislation to extend the current deadline for applying for a PPP loan to August 8, 2020. This allows small business owners who have not yet applied more time to submit an application. In addition, discussions have already started in Congress in support of another coronavirus relief bill to help businesses continue to navigate the economic volatility due to COVID-19.


Q. Where Can I apply for a Paycheck Protection Program Loan (PPP)?

You can apply through any existing SBA-approved lender or through any federally insured depository institution (bank, credit union, etc.) and farm credit system institution that is participating.

You should consult with your local bank, credit union or lender as to whether it is participating in the program. There will be more regulated lenders available to make these loans once they are approved and enrolled in the program.

Find a Lender near you: PPP Lenders


Q. What are allowable uses of loan proceeds?

Payroll costs (as noted above):

• Costs related to the continuation of group health care benefits during periods of paid sick, medical, or family leave, and insurance premiums
• Employee salaries, commissions, or similar compensations (see exclusions above)
• Payments of interest on any mortgage obligation (which shall not include any prepayment of or payment of principal on a mortgage obligation)
• Rent (including rent under a lease agreement)
• Utilities
• Interest on any other debt obligations that were incurred before the covered period


Q. How is the loan amount calculated for my small business?

The loan size will be calculated in different ways, depending on your business situation. The maximum loan size available is $10 million.

Examples of loan calculations:

• If you were in business February 15, 2019 – June 30, 2019: Your max loan is equal to 250 percent of your average monthly payroll costs during that time period. If your business employs seasonal workers, you can opt to choose March 1, 2019 as your time period start date.
• If you were not in business between February 15, 2019 – June 30, 2019: Your max loan is equal to 250 percent of your average monthly payroll costs between January 1, 2020 and February 29, 2020.
• If you took out an Economic Injury Disaster Loan (EIDL) between February 15, 2020 and June 30, 2020 and you want to refinance that loan into a PPP loan, you would add the outstanding loan amount to the payroll sum.


Q. What are the loan term, interest rate, and fees?

The term for this loan is 2-years and there’s no pre-payment penalty. The interest rate is fixed at 1%. No collateral and no personal guarantee is required and loan payments will be deferred for 6 months (however; interest will continue to accrue over this period.)


Q. What costs are covered in the Paycheck Protection Program Loan (PPP)? 

Compensation, including: salary, wage, commission, or similar compensation, payment of cash tip or equivalent:

• Payment for vacation, parental, family, medical, or sick leave
• Allowance for dismissal or separation
• Required payment for the provisions of group health care benefits, including insurance premiums
• Any retirement benefit payment
• Payment of State or local tax assessed on the compensation of employees


Q. How do I qualify for Loan Forgiveness with the Paycheck Protection Program Loan (PPP)?

The loan amounts up to $10 million will be forgiven as long as:

The loan proceeds are used to cover payroll costs, and most mortgage interest, rent, and utility costs over the 8-week period after the loan is made; and employee and compensation levels are maintained.

You can submit a request to the lender that is servicing the loan. The request will include documents that verify the number of full-time equivalent employees and pay rates, as well as the payments on eligible mortgage, lease, and utility obligations. You must certify that the documents are true and that you used the forgiveness amount to keep employees and make eligible mortgage interest, rent, and utility payments. The lender must make a decision on the forgiveness within 60 days.


Q. Who is eligible for the Paycheck Protection Program Loan (PPP)?

All businesses with 500 or fewer employees. This includes sole proprietorships, self-employed individuals and independent contractors. This includes a business that operates as a franchise.


Q. Are Independent Contractors eligible for the Paycheck Protection Program?

Yes. Independent contractors, sole proprietors, self employed are eligible for the Paycheck Protection Program.


Q. How does the PPP loan coordinate with SBA’s existing loans?

Borrowers may apply for PPP loans and other SBA financial assistance, including Economic Injury Disaster Loans (EIDLs), 7(a) loans, 504 loans, and microloans, and also receive investment capital from Small Business Investment Corporations (SBICs). However, you cannot use your PPP loan for the same purpose as your other SBA loan(s). For example, if you use your PPP to cover payroll for the 8-week covered period, you cannot use a different SBA loan product for payroll for those same costs in that period, although you could use it for payroll outside of that time period or for different workers.


Other Resources

PPP loan details: PPP Fact Sheet

For additional support for Small Businesses during the Coronavirus Pandemic: https://www.nationalfunding.com/covid-19/

For more information on PPP, visit The SBA hotline to help answer questions 1-800-659-2955, 7 days a week from 7:00a.m. to 9:00p.m.



As of publish date, while the information provided in this article is intended to be accurate, it should not be considered legal advice. These programs are rapidly evolving and we cannot be held responsible for any errors or omissions. Please contact your local bank, SBA and U.S. Treasury websites for updated information. You should also consult with your tax, legal or financial advisor to make the right choice for your business. 



COVID-19 Relief for Small Business and Paycheck Protection Program (U.S. Small Business Administration)



2 comments on “What Is the SBA Paycheck Protection Program (PPP) and How to Apply?

  1. Lance Gore on

    Hi, I own a small business in Lexington SC and my business acct is with First Reliance. I have banked with them for yrs. My concern is their website says due to their size, they will only be able to approve a limited number of these PPP loans for their customers. It is still not up and running as of 4pm Tues, Apr 7th. It is not fair that my participation in this program is tied to the size and ability of my bank. They are an SBA lender by the way. I feel like if I don’t hit the “lottery” with them and get approved, I may miss out.

    I called my old bank BB@T as they are much larger and was willing to move my biz acct to them, but was told they cannot process PPP loans for new accounts. They said something about that was a rule by the SBA that you have to be an acct holder prior to Feb 2020 or something like that in order to apply. In other words, no new accts.

    Please provide guidance as to what recourse I have to use a different approved SBA lender if 1st Reliance is unable to handle my PPP loan and cannot open an acct with a new bank to process.

    Thank you

    • The Bottom Line Blog Team on

      Hi Lance,

      We are sorry for the confusion and frustration you are experiencing. Your situation is being echoed by many small business owners. The SBA website does have a link to find approved lenders near you. Hopefully this is helpful: https://www.sba.gov/paycheckprotection/find
      We wish you the best during this difficult time.

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