Can I get a PPP loan if I just started my business this year? (UPDATE FOR 2021)

Important PPP update for 2021

On December 22, 2020, Congress passed a bill renewing funding under the CARES Act, including an additional $284 billion earmarked for America’s struggling small businesses. The rules and application process for PPP loans and forgiveness have been modified, with more businesses eligible for PPP loans, more expenses forgivable, and a simplified application process. Start your PPP loan application now!

In this 2-minute read:

  • Can I apply for a Paycheck Protection Program loan if my business started in 2020?
  • What if I have a seasonal business?

Entrepreneurs are regularly starting new businesses. That’s how the American economy stays strong and continues to move forward. With current circumstances of the COVID-19 pandemic though, new businesses might be having a harder time in 2020 than they imagined. 

Under the new CARES Act and Paycheck Protection Program (PPP), businesses are able to apply for loans to help them mitigate the financial impacts of this crisis. But are new businesses eligible?

Get your PPP loan or second draw PPP loan through Womply! Womply has helped over 200,000 businesses get their PPP funding. It’s free to apply for a PPP loan, and Womply can help connect you with an SBA lender that’s right for you! Start your PPP application.

Do I still qualify for a PPP loan if I started my business in 2020?

Depending on when your business was established, you may still qualify for a PPP loan. Your business must have been in operation as of February 15, 2020 in order to apply for a PPP loan. 

For most businesses, PPP loan amounts are calculated based on average payroll costs over the past year. However, due to the nature of your new business, you can calculate your loan amount based on your average average total monthly payroll costs incurred from January 1, 2020 to February 29, 2020 and multiply that by 2.5.

See our FAQs for more info on PPP for new businesses started in 2020.

Can I get a PPP loan if I started my business in 2021?

Currently only businesses in operation as of February 15, 2020 may apply for a PPP loan. We’ll keep you updated if this changes.

See our FAQs: Do I still qualify for a PPP loan if i started my business in 2021?

What if I just started as an independent contractor or am self-employed?

The exception appears to be for sole proprietors, independent contractors, and self-employed individuals. In a supplemental letter on 4/14/20, the treasury department stated:

Regardless of whether you have filed a 2019 tax return with the IRS, you must provide the 2019 Form 1040 Schedule C with your PPP loan application to substantiate the applied-for PPP loan amount and a 2019 IRS Form 1099-MISC detailing non-employee compensation received (box 7), invoice, bank statement, or book of record that establishes you are self-employed. You must provide a 2020 invoice, bank statement, or book of record to establish you were in operation on or around February 15, 2020. 

[You will need to provide your lender with payroll, tax, and business documentation. We’ve compiled a list of required documents your lender will likely ask for HERE.]

Finally, although the Act makes businesses in operation on February 15, 2020 eligible for PPP loans, the Administrator, in consultation with the Secretary, has determined that self-employed individuals will need to rely on their 2019 Form 1040 Schedule C, which provides verifiable documentation on expenses between January 1, 2019 and December 31, 2019. For individuals with income from self-employment from 2019 for which they have filed or will file a 2019 Form 1040 Schedule C, expenses incurred between January 1, 2020 and February 14, 2020 may not be considered because of the lack of verifiable documentation on expenses in this period

Be sure to familiarize yourself with the treasury department’s guidance here.

What if I have a seasonal business? Can I still apply for a PPP loan?

Seasonal businesses can apply for a PPP loan so long as they meet all other eligibility requirements for the program. 

The main difference between seasonal businesses and year-round businesses is that your loan amount will be calculated differently. Rather than using the average monthly payroll costs for the previous year, you will use your average costs from February 2019 through June 2019 to determine how much you can apply for. 

See our full list of PPP FAQs here for more details.

Go deeper: PPP: How do I calculate Average Monthly Payroll and Loan Request Amount?

Why use Womply to apply for your PPP loan?

As you know, it’s free to apply for a PPP loan, and we know you have lots of choices. So why should you let Womply connect you with an approved SBA lender? Because we know what we’re doing and people love the help we provide. We’ve helped over 200,000 businesses, contractors, sole proprietors, and self-employed individuals get approved. Don’t wait! The deadline is March 31, 2021.

Start your PPP application now!

Learn more, plus get free reputation monitoring and customer insights when you sign up for Womply Free!


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