PPP Loan Application – Eligibility Requirements You Need to Meet
If you’re a business owner or entrepreneur who’s interested in applying for a PPP loan, there are some eligibility requirements that you need to meet. This article will help you learn about them.
Generally, sole proprietors and independent contractors can borrow up to 2.5 times their monthly payroll costs (or average monthly net profit for non-employers). But the accommodation and food service industries can get up to 3.5 times their average monthly payroll costs.
You’re a Small Business
You must meet a few eligibility requirements if you’re looking for a PPP loan application. These include being a small business, self-employed, a sole proprietor or an independent contractor.
It would help to show how you’d use the funds for your business’s benefit. You also need to follow the terms and conditions of the PPP loan program.
For example, you must show how you’ll spend 60% of your loan proceeds on payroll and other eligible expenses. You also need to provide documentation of your expenses and earnings.
You’re a Sole Proprietor
Sole proprietorships are the oldest and most straightforward type of business. They can be formed for free and give you complete control over your business.
However, you should know some essential aspects of owning a sole proprietorship. For instance, you may need to register for a business license and have a separate bank account.
In addition, consider registering for an employer identification number (EIN), which the IRS requires for tax filings. Also, you should file a DBA name (doing business as), which is necessary for branding and marketing purposes.
You’re a Nonprofit
If your business is a nonprofit, you must meet specific eligibility requirements. These include that you have not made any profits, and your primary purpose is not to benefit yourself or the people in your community.
Nonprofits include churches, synagogues, Islamic groups, local orchestras, and ballet companies. These organizations often have missions around their faith, such as seeking new converts or providing religious ceremonies and counseling.
Most of these organizations have a public benefit. They serve the community and can help to address critical issues like the environment, animals, human rights and child welfare (SHP is included).
You’re a Public Benefit Organization
A public benefit company (PBC) is a hybrid entity that combines the best qualities of nonprofit and for-profit companies. These organizations can be any size, typically tax-exempt and philanthropic. These include social service organizations, volunteer fire departments, museums and youth sports leagues.
PBCs are not for the faint of heart, however. They may be challenging to incorporate, and many states have a myriad of regulatory hurdles to overcome. For example, PBCs must submit a benefits report to their state government to verify that they are not merely cashing out on the public good. They are also subject to a hefty registration fee to be considered legitimate. Some may even be required to display a “Certified B Corp” logo.
You’re a Public Service Organization
If your business is a public service organization, you must meet some eligibility requirements before applying for a PPP loan. In addition, you must have been in operation since at least February 15, 2020, or you will be disqualified for any new funding under this program.
A public service organization is a business that provides goods or services to the general public and does not operate in more than one physical location. You must also have a minimum of 30 employees and work at least 30 hours per week to qualify for this program.
To get the most out of a PPP loan, you’ll want to keep accurate records of your expenses and income. This will help you ensure you spend your funds correctly and avoid an audit.
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