How much does it cost to apply for a Paycheck Protection Program loan? (2021 update)


Congress has approved an extension of the PPP loan program until June 30, 2021, including “second draw” PPP loans for businesses that received PPP funding in 2020.


In this 2-minute read:

  • Does it cost anything to apply for SBA/PPP loans?
  • Do I need to put up collateral for a Paycheck Protection Program loan?
  • Do I still have to maintain employee and compensation levels for 2021?
  • What is the interest rate for a PPP loan?
  • What are the terms of a PPP loan?

Under the CARES Act, $2 trillion was originally allocated in March, 2020 to help with relief efforts of individuals and businesses to help mitigate the financial impacts of the COVID-19 pandemic. Business owners and independent contractors were able to apply for loans through the Paycheck Protection Program (PPP) to help them through the next 8 weeks (or 24 weeks) following the receipt of their funding. 

For 2021, the PPP has been renewed and the application deadline is May 31, 2021. There are simpler rules, simpler application forms, and even more businesses are eligible. Read more about PPP for 2021.

FORGIVENESS UPDATE: On June 5, 2020, President Trump signed into law new updates to PPP loan forgiveness requirements, extending the covered period to 24 weeks, reducing the minimum loan funding that must be spent on payroll to 60%, and easing the requirements for maintaining staffing and compensation levels. Please read the details here.

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What does it cost to apply for PPP loans?

You should not be charged for applying for PPP loan. Applying for SBA loans is free. SBA-approved lenders and loan facilitators/agents receive their compensation from the SBA, not from borrowers. If you are asked to pay for assistance applying or any fees for the loan itself, you should seek another lender or agent. 

Find a trusted lender or loan agent who will be honest with you about the application process and how you will get your loan. 

Do I need any collateral for Paycheck Protection Program loans?

No collateral is required for PPP loans, nor is there a personal guarantee. You should not be asked to put up any collateral for your loan. If you are asked to do so, we urge you to seek out a reputable SBA-approved lender. 

What is the interest rate for PPP first or second-draw loans?

You will have a fixed 1.00% interest rate for the duration of your loan. This will not vary by lender because this program is sponsored by the federal government. If you are told that your interest rate will be different from this, find another lender or trusted agent to help you with your loans.

What are the terms of first and second-draw PPP loans? Does it differ among lenders?

The terms of your PPP loan will be the same no matter which lender you apply through because this is a federally backed emergency relief program. All businesses will receive the same terms on their loans.

The terms of these PPP loans are as follows:

  • PPP loans can be forgiven as long as they are used to cover payroll costs, mortgage, rent, and utilities AND employee and compensation levels are maintained. NOTE: for 2021 there are important exceptions allowed on the latter. Read more: How do I get my PPP loan forgiven?
  • Payroll costs are capped at $100,000 on an annualized basis for each employee
  • Loan payments will be deferred until the borrower receives notification from the SBA approving the loan forgiveness application, or for 10 months (previously six months), though interest will still accrue during that time
  • Loans can be received for the amount of two months of your average payroll costs from the last year, plus an additional 25% (this is capped at $10 million for first draw PPP loans, and $2 million for second-draw loans)
  • Loans are due in five years (previously 2 years)

Please note: For more information about loan forgiveness, please read Do I have to pay back my PPP loan? Here’s how to get your loan forgiven.

Click to read our article about calculating your average payroll costs and loan request amount

Read our full list of PPP application FAQs.

If I get 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.

Loan amounts for less than $50,000 are also exempt from this rule.

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).

If you’ve kept those requirements for the 8 (or 24) weeks after you received your PPP loan, at that point you may apply for loan forgiveness through the lender that serviced your loan.

In order to request any amount of forgiveness on your loan, you will need to verify that your loan was used for the required expenses, which means you’ll need documented proof.

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