The new PPP loan application process has been simplified for 2021, but there are still some pitfalls and mistakes that could prevent you from getting your funds! In this short blog post, we’re going to cover the few most common PPP mistakes we see small businesses and independent contractors make. Avoid these mistakes and get your PPP funds as fast as possible!
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1. You didn’t apply for your PPP Loan
If you own a small business, get a 1099, or you’re self-employed you should apply. There are 30 million businesses in America and most them qualify for a PPP loan!
2. You started but didn’t finish your application
Stick with it! The minimum loan size is $1,000. It can take an hour or two to apply, so for most people you’ll make hundreds of dollars per hour.
3. You disqualified yourself from a second draw loan because you didn’t calculate your revenue decline correctly
This is a common problem.
As long as you meet the minimum requirements for a Second Draw PPP Loan, you can qualify for a second draw loan based on many different calculations of revenue. If you meet any of these tests, you’re in!
- If total revenue in 2020 was 25% below 2019, or
- if Q1 2020 was 25% below Q1 2019, or
- if Q2 2020 was 25% below Q2 2019, or
- if Q3 2020 was 25% below Q3 2019, or
- if Q4 2020 was 25% below Q4 2019.
Keep in mind for smaller loans and self-employed people the documentation to apply is very light. So if you make a good faith certification that your revenue declined then you’re fine.
4. You didn’t maximize your loan value
You have 3 different options to determine loan size on a 2021 first draw loan:
- 2019 payroll
- 2020 payroll
- Last 12 months payroll (from the date you apply for the loan)
For a second draw loan, you can use either 2019 or 2020 payroll: so pick the bigger number. You can decide which number to use here and this will determine your loan size. The rest is calculated based on a government formula that you can’t control.
5. You got rejected or ignored by your banker
We have many lenders that are happy to serve you so don’t take “no” or no response as an answer.
PPP rules are complicated so don’t let a banker who’s read one email about the program tell you not to apply. Many people don’t understand this program has changed a lot since it started: more people and more businesses are eligible now for more money.
So read the facts for yourself, apply with another lender, or ask us for help! Don’t miss out on this opportunity to get funds that are meant to help you and your business get through this crisis!
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