Are you looking for PPP Loan Application tips? Then, the Small Business Administration’s Paycheck Protection Program for many businesses seems like a much needed financial rescue. It is allocating $349 billion for small businesses in forgivable loans for payroll and overhead. The program offers loans of up to $10 million at 1% interest to companies and nonprofits with fewer than 500 workers to cover two months of payroll and overhead expenses. The best part, if the borrower retains workers and doesn’t cut their wages, the government will forgive most or all of the loan and repay bank lenders.
Take advantage of this program with this tips
Make Sure Your Bank Has Completed Their PPP Loan Application
If your bank has not yet completed the PPP paperwork, they cannot take your application. You could go to another bank. However, because of the overwhelming amount of applications, many banks are only working with existing customers.
Calculate Your Loan Amount Correctly
A simple answer is to take your average monthly payroll from the last quarter of 2019 and multiply it by 2.5. Although, there are a few more important points. You will want to include things like commission tips, vacation pay, medical, parental, and sick pay. Also include healthcare benefits, insurance premiums, both employer and employee contributions to a retirement program, and state and local payroll taxes paid.
You don’t need to include the employer-paid portion of federal payroll taxes known as FICA (e.g. social security and medicare payroll taxes). Nor the Roth contributions or other after-tax contributions made by an employee. Because these are already included in form 941 box 2 under wages paid.
Submit Your 941 Payroll Forms With Your Loan Application
Is important that you submit your 941 payroll forms, since many small businesses rely on them to calculate payroll amounts. The failure to do so could hold up your application and its approval.
The application form can be found at:https://www.sba.gov/document/sba-form–lender-application-form-paycheck-protection-program-loan-guaranty-0
After completing an application, be aware that a successful application does not necessarily mean a successful approval. The review process can take up to 3 weeks. After the application approval, the funds should be disbursed with-in 3 days. Keep in mind, the program is new and it has some kinks that needs to be worked out.
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