Here’s How to Land a PPP Loan for Your Small Business

by Dana George | Updated July 25, 2021 - First published on April 22, 2021

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Applying for a PPP loan is easier when you prepare ahead of time.

The American Rescue Plan Act of 2021, signed into law by President Joe Biden on March 11, adds $7.5 billion to the Paycheck Protection Program. If you're a business owner who's been financially impacted by COVID-19, you currently have until May 31, 2021, to apply for a PPP loan. The process is easy and can be accomplished in five steps.

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1. Get matched with a lender

On the U.S. Small Business Administration (SBA) website, you'll find two links. One helps you find lenders in your area offering PPP loans, and another matches you with a lender.

While there is no "official" minimum credit score required to qualify for a PPP loan, it appears that some lenders do conduct a credit check while assessing your application. If your business is in trouble, but you're worried that your credit score is too low to qualify for a loan, ask the lender two questions:

  • Do you plan to run a credit check?
  • If so, what is the minimum score required to qualify for a PPP loan?

You may need to shop around for a lender that does not run a credit check.

2. Complete a loan application

Like any loan application, a PPP loan asks for basic information, like your name and home address. In addition, you'll need to provide specific information regarding the following:

  • Business address: Be sure to use the five-digit zip code rather than nine-digit.
  • Type of business: Select the type of business you own and double-check it before moving on. The documents you are required to provide are based on the type of business you own.
  • Tax ID: Confirm that you entered a 9-digit Tax ID number.
  • Loan amount requested
  • Date your business first started: Make sure to use the same date as the one used when you filed with your Secretary of State.
  • The industry under which your business falls: If you don't see the exact industry on the menu of options, choose the one that matches best.
  • Number of employees: Remember to count yourself as one.

3. Confirm ownership of the business

The application will ask you what percentage of the business you own. If you're a sole proprietor, it's 100%. If you're a co-owner, you'll need to provide information about any individual who owns 20% or more of the business. If you co-own the company, be aware that you'll need a copy of each owner's driver's license, front and back.

4. Upload supporting documents

Here's a list of other documents that may be requested:

For business owners:

  • 941 quarterly tax filing or 944 annual tax filing
  • Payroll register for the previous 12 months
  • Bank statements for the previous 12 months

For 1099 independent contractors or self-employed:

  • IRS 1040 Schedule C
  • 1099s received from clients
  • Last year's income and expense reports
  • Bank account statements for the previous 12 months

5. Sign loan papers and wait for funding

Your lender can give you a sense of how long it will take them to process the application. As long as you provide documentation promptly, your loan may be approved in as little as three days. Once your loan is approved, you will be asked to sign loan papers.

The SBA specifies that PPP loans must be funded within 10 calendar days of approval. While there's no need for concern if it takes your lender slightly longer, reports indicate that most lenders meet or beat the deadline.

If your business is struggling, a PPP loan can be a lifeline, a way to get through until the world rights itself. The trick to a smooth application process is to gather any documentation you may need and double-check your application before filing. Application errors will only slow you down and make it more difficult to get funds into your bank account as quickly as possible.

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