Eligible Small business owners have until March 31st to submit their application for the Paycheck Protection Program’s second draw.  The PPP loan can be forgivable depending on how you spend the money.   Nearly 1 trillion dollars have been available to small businesses to protect their employees’ paychecks since April.

The PPP was created in response to coronavirus. Small businesses with fewer than 500 employees can get up to $2 million to cover payroll costs, mortgage interest, rent, and utility expenses.  Small businesses get approved for 2.5x the average monthly payroll costs, healthcare, commissions, and other miscellaneous employee expenses.  PPP Round 2 reduced the number of employees from 500 to 300.  

The program does not require any credit check or collateral, but the small business owner needs to apply for the loan via an SBA-approved lender. 

If you got approved for the first round of the PPP, you are eligible for the second round. For first-time applicants, you must be in business as of February 15, 2020.  

For loans under $150,000, there will be a simple one-page forgiveness form that you can submit to your lender.  If the SBA does not forgive your PPP loan, the annual percentage rate (APR) is 1%, and the maximum repayment term is between 2 and 5 years.

Sole proprietors, single-member LLCs, and gig workers are all eligible to file for the PPP round 2.  The process is the same.  The applicant needs to apply for the loan through an SBA-approved lender.  You can locate SBA-approved lenders here. 

PPP vs. EIDL

Unlike the PPP, the Economic Injury Disaster Loan (EIDL) is non-forgivable, which may require a credit check and collateral.  Applicants can apply for the EIDL directly through the SBA website.  Like the PPP, small business owners have to be in business as of February 15, 2020.  

EIDL loans are available up to $2 million.  The annual percentage rate (APR) is 3.5% or 2.75% for nonprofits, and the maximum repayment term is up to 30 years.   The deadline to apply is December 31, 2021.