PPP Details and Instructions

Who's Eligible | Eligible Uses of Funds | Deadline | Max Loan Amount | Instructions | Forgiveness

About PPP

The first iteration of the program (now referred to as PPP Round 1) was passed in March of 2020, with more funding added to it in April. A second stimulus package and PPP were passed on December 27, 2020 (known as PPP Round 2), which added more funding and expanded the types of expenses that businesses are able to use the funds for.

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The goal of this loan is to cover your operating expenses for 8-24 weeks, so that you can maintain your employee count and level of compensation. Therefore, the amount you are able to borrow and the length of time your loan payments are deferred are based on documentation of your company's average 2019 or 2020 payroll expenses. The loan is entirely forgivable, as long as you meet spending and documentation requirements.
 

Applications are now open for PPP Round 2:

• If you did not previously receive funding, you can apply now as a first-time applicant.

• If you did previously receive funding, you are eligible to request a second draw of funding

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Benefits of the PPP loan:

• All small businesses in operation prior to February 15, 2020 are eligible​.

• The loan covers expenses for 8-24 weeks, starting from disbursement. (Loans made before June 5, 2020, covered only 8 weeks.)

• Loans made after June 5, 2020, have a 1% interest rate and a five-year maturity rate. (Loans made prior to that date have a two-year maturity rate.)

• PPP loans are forgivable: as long as you meet all forgiveness requirements listed below, the loan effectively becomes a non-taxable grant.

• If you do not fully meet the forgiveness requirements, part of your loan may still be eligible to be forgiven. (It's not "all or nothing.")

• If any part of your loan is required to be paid back, you do not begin making payments until either your forgiveness application is processed (which could be up to several months), or 10 months after your 8- to 24-week covered period ends.

• No collateral or personal guarantees are required.

• There are no fees.

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PPP loans are fully forgivable

PPP loans are 100% forgivable (meaning you will not be required to pay back the loan) if you meet all forgiveness requirements.

Basic forgiveness requirements:

• Maintain employee and compensation levels (there is a safe harbor for companies that are unable to maintain pre-COVID employee levels due to reduction in business)

• Spend at least 60% of loan funds on payroll costs

• Spend up to 40% of funds only on other eligible expenses

• Provide required forgiveness documentation before the end of your 8- to 24-week loan period (or 8-week loan period for loans made prior to June 5, 2020)

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What happens if forgiveness requirements are not met

If you are unable to fully meet the forgiveness requirements, the SBA may not forgive part or all of your loan. You will be required to repay any unforgiven portion at an interest rate of 1%, over five years. 

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Who is eligible to apply

Any small business, including sole proprietorships, independent contractors, self-employed individuals, S and C corporations, and nonprofits (including churches, veterans organizations and tribal businesses), that was open on or prior to Feb. 15, 2020 is eligible to apply.

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First-time applicant eligibility requirements

• Must be a small business - usually defined as having less than 500 employees.

  • ​The employee count varies for some industries. Check the SBA's sizing guide to confirm that your company is a small business.

• Must have been open on or before Feb. 15, 2020

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Second draw applicant eligibility requirements

• Used or will use the full amount of your first draw PPP loan for eligible uses

• Has no more than 300 employees

• Can demonstrate at least a 25% reduction in gross income between comparable quarters in 2019 and 2020

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Eligible uses of funds

PPP loans can be used to help fund payroll costs (including benefits), mortgage interest, rent, utilities, worker protection costs related to COVID-19, uninsured property damage costs caused by looting or vandalism during 2020, and certain supplier costs and expenses for operations. Full list of eligible uses.

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Borrower beware: As part of your application, you'll have to certify that you will spend the funds in the appropriate way. If you do not spend the funds appropriately, you could be charged with fraud. (Plan ahead to keep good records of all your expenses!) 

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Deadline to apply is March 31, 2021

For the current round of PPP, you may apply until this date.

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Determine your max loan amount and covered period

Max loan amount

Use these steps to calculate the maximum amount you can borrow, using your tax records from either 2019 or 2020 (your choice):

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• Start with total of salaries, wages, vacation, sick pay, etc. from W2 or W3 (do not include 1099 contractors)

• Subtract salary more than $100,000 per employee (maximum payroll for any individual may not exceed $100,000)

• Add group health insurance premiums paid by your company

• Add retirement benefit costs paid by your company

• Add state and local taxes on employer compensation, paid by your company

• This number equals your total eligible payroll costs

• Divide your total eligible payroll costs by 12 to determine your average monthly payroll costs

• Multiply your average monthly payroll costs by 2.5 to determine your max PPP loan amount (multiply by 3.5 if your company's NAICS code begins with 72 - Accommodation and Food Services category)

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Download a printable max loan amount calculation worksheet

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Reference this SBA Worksheet to confirm your max loan amount for various business types including self employed, independent contractors and more.

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Covered period

Your covered period is the length of time between when the funds are disbursed to you, and the date by which you must spend all of your PPP loan funds. You have 10 months after the end of the covered period to file for forgiveness before you are required to begin paying back your loan.  

You are responsible for determining your covered period. It should represent the length of time your requested loan amount will cover your eligible expenses. (Keep in mind, you must document how you spend the money in order for your loan to be forgiven. )

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To determine your covered period, review the list of eligible expenses, keeping in mind that 60% of your requested loan amount must be spent on payroll expenses. Then determine how long it will take you to spend the loan amount you're applying for.

A helpful guideline: 2.5 times your average payroll costs will be spent in roughly 10 weeks. For companies in the Accommodation and Food Services category (NAICS code beginning with 72), 3.5 times your ​average payroll costs will be spent in roughly 14 weeks.

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Instructions for applying

1. Review the information provided on this page

Familiarize yourself with the PPP loan details and forgiveness requirements to make sure you will benefit from this program.

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2. Open a PPP-dedicated bank account

This is a required step. Keeping a separate account will prevent your PPP funds from becoming comingled with funds you are using to pay non-eligible expenses, helping you avoid issues in filing for forgiveness.

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3. Determine your max loan amount and covered period

Use the instructions and worksheet provided above.

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4. Refine your business plan accordingly

In order to qualify for forgiveness, you must spend your PPP funds on only eligible expenses, within the covered period. Make sure your business plan is aligned accordingly.

If the requirements of the PPP loan will not allow you to fully accomplish your goals, ECDI provides a range of small business loans (non-forgivable), which can serve as a companion, supplement or alternative to your PPP funding. Our business advisors are on-hand to help you refine or review your business plan to assure you are set up for success. Complete this inquiry form to be matched with an advisor.

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5. Gather all items on the application checklist:

• Your company's average monthly payroll costs (per the instructions above)​

• 2019 or 2020 proof of payroll costs (tax records)

• PPP-dedicated business banking account numbers for electronic funds transfer (routing and account numbers are needed)

• Active Secretary of State entity filing

For any person who owns 20% or more of your business:

• Social security number or taxpayer identification number (TIN) and employer identification number (EIN)

• Driver's license or passport 

• Email address

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Download printable checklist

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View sample application

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After you have gathered all the documentation on the checklist:

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Instructions for filing for loan forgiveness

When to file for forgiveness

After using all of the PPP loan funds they receive, a borrower can apply for forgiveness at any time after the end of the covered period, up until the maturity date of the loan (5 Years from the date of disbursement).

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However, if borrowers do not apply for forgiveness within 10 months after the last day of the covered period, then PPP loan payments are no longer deferred, and borrowers must begin making loan payments.

Therefore, we recommend you file for forgiveness after you have spent all the funds, but before 10 months after the last day of your covered period.

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How to file for forgiveness

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1. Compile your documentation

Payroll 
Include all payroll periods that overlapped with the Covered Period or the Alternative Payroll Covered Period

• Bank account statements or third-party payroll service provider reports documenting the amount of cash compensation paid to employees

• Tax forms (or equivalent third-party payroll service provider reports) for the periods that overlap with the Covered Period or the Alternative Payroll Covered Period:

  • Payroll tax filings reported, or that will be reported, to the IRS (typically, Form 941)

  • State quarterly business and individual employee wage reporting and unemployment insurance tax filings reported, or that will be reported, to the relevant state

• Payment receipts, cancelled checks, or account statements documenting the amount of any employer contributions to employee health insurance and retirement plans that the borrower included in the forgiveness amount

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Non-payroll 

Include any expenses that were incurred or paid during the covered period and/or obligations or services that existed prior to February 15, 2020:

• Business mortgage interest payments: Copy of lender amortization schedule and receipts verifying payments, or lender account statements

• Business rent or lease payments: Copy of current lease agreement and receipts or cancelled checks verifying eligible payments

• Business utility payments: Copies of invoices and receipts, cancelled checks or account statements

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Note: This list of documents required to be submitted is not all-inclusive. You will need to assure you have documented any expense that is covered by your PPP loan.

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2. Submit your documentation

Forgiveness applications will be ​completed through this site, with a similar process to the loan application. Further details will be shared here as they become available from the SBA. Plan ahead to submit your documentation in a timely manner in order to assure loan forgiveness.

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3. Stay in touch with ECDI to receive updates

ECDI will keep you informed of the progress of your application. If SBA undertakes a loan review, ECDI will notify you. You have the right to appeal certain SBA loan decisions. In the event that any portion of your loan is not forgivable, ECDI will provide further instructions on how and when you must repay the portion of the loan. 

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Additional information that may be helpful:

SBA's Frequently Asked Questions about PPP Loan Forgiveness

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SBA PPP Guide

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