Can I still get a PPP loan if I’ve closed my business or laid off employees?

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. Also there is provision for “second draw” PPP loans for businesses that received PPP funding in 2020. Start your PPP loan application now!

 

In this 2-minute read:

  • Can I get a PPP loan if my business closed?
  • Can I get a PPP loan if I’ve laid off employees?
  • What if an employee quits or resigns? Can I still get my loan forgiven?

Due to the financial impacts of the coronavirus pandemic and customers adhering to stay-at-home orders, multiple American businesses have had to close their doors or lay off their employees—temporarily or permanently.

Many businesses in this position wonder if they still qualify for Paycheck Protection Program loans, which are intended to keep Americans employed and businesses open during this crisis. 

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.

If I’ve closed my business, can still I get a Paycheck Protection Program loan?

If you had to close your business between February 15, 2020 and April 26, 2020, but have reopened, you may still qualify for PPP loans. For businesses that went out of business prior to that time period, you aren’t eligible for this program. If your business has permanently closed, you’re not eligible for the PPP loan program, unfortunately.

How long do I have to rehire employees and restore payroll in order to apply for a PPP loan?

In 2020, if you had to lay off employees or reduce salary levels between February 15, 2020 and April 26, 2020, you could still qualify for PPP loans. 

In order to be eligible, you just need to hire back your employees (technically any employees, but of course the intent is to keep your former staff employed) and restore their salaries and hours worked to be the same that they were before this time period. Check out our full article about PPP loan forgiveness

What if I couldn’t keep my employees, they quit, or refused to be rehired? Can I still qualify for loan forgiveness?

For 2021 there are certain exceptions to the “maintaining employees levels and compensation” rule.

If you received a PPP loan of $50,000 or less

If you received a PPP loan that was $50,000 or less, you are exempt from having to maintain your employee and compensation levels in order to receive loan forgiveness. Your loan must still be spent on approved costs and you will still need to document that you spent at least 60% of your funds on payroll expenses. 

When you’re ready to apply for loan forgiveness, you will want to contact your lender to receive the simplified loan forgiveness form. 

An employee quit, retired, or was fired (with just cause), or refused your offer to be rehired

If you couldn’t maintain employee levels due to someone quitting or being fired with just cause, then you can still qualify for full loan forgiveness. You can also get full loan forgiveness if you have written proof that you offered to rehire employees who refused your offer (if your offer was at their former pay). But, it’s very important that you document each of these instances so that you can verify this when you apply for loan forgiveness. 

You’ll need documentation to explain why your employee was fired or other supporting documents to verify an employee’s termination or refusal to be rehired.

If I apply for my first draw PPP loan after December 27, 2020, do I still need to restore payroll or headcount to previous levels in order to receive forgiveness?

No. PPP Loans received after December 27th, 2020 are not required to “rehire” any employees in order to receive forgiveness. You will, however, need to maintain current payroll levels during the forgiveness period. (Exceptions to this would include employees who resign or are terminated with cause).

Go deeper: read about how to calculate your average monthly payroll and PPP loan request amount

PPP FORGIVENESS UPDATE AS OF JUNE 17, 2020

The Treasury released a new IFR and an “easy” version of the PPP loan forgiveness application on June 17, 2020. Please read the full details here.

Here’s how borrowers decide which forgiveness application to use. You may use Form 3508EZ if:

  • You are self-employed and have no employees; OR
  • You did not reduce the salaries or wages of employees by more than 25%, and did not reduce the number or hours of employees; OR
  • You experienced reductions in business activity as a result of health directives related to COVID-19, and did not reduce the salaries or wages of employees by more than 25%.

If you don’t fit into any of the above conditions, you will need to complete and submit the full PPP loan forgiveness application.

Let Womply help you apply for your PPP loans!

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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