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 3-minute read:
- The PPP loan program allocates billions to American small businesses impacted by COVID-19
- Once you apply for a PPP loan, you’ll need to collect certain business, tax, and payroll documents for your lender
- This article contains a checklist of the documents you’ll most likely need to give your lender
In March 2020, the federal government approved $349 billion (!!) in emergency funding for American small businesses impacted by the COVID-19 outbreak. The small business stimulus program is called the Paycheck Protection Program (PPP), and small businesses nationwide are lining up to apply for the renewed PPP loan program for 2021.
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.
Once you complete the PPP loan application, you’ll need to collect some documents for your loan officer. This article is a checklist of what your lender will mostly likely ask for.
All PPP loan applicants will need to provide:
- Drivers license for all business owners
- Tax returns (2019 and 2020, whichever filed last. Note that independent contractors and self-employed individuals can use their 2020 tax filings as evidence even if they haven’t filed yet for 2020. You’ll need to attest to the accuracy of the information)
- Form 941
- Form and instructions (here)
- Ideally, please have Form 941 for the four quarters of 2019 and, if available, for 2020.
- If you work with a Professional Employer Organization (PEO) and do not have IRS Form 941, please have your latest payroll report from the PEO that covers 12 months of payroll.
- If you do not file an IRS form 941 please upload the annual IRS 944 filing from 2019 and 2020 if available
- 1099 Misc
- Form and instructions (here)
- Form 4506
- Schedule of Liabilities
- The start date for your business
- NAICS code for the business applicant
- Look up your NAICS code (here)
- Your bank account info, routing number, statements, and void check
- Payroll records for Jan 1, 2019 to present
- Records should include individual employee headcount and any other eligible expenses deemed as payroll costs (as defined by the SBA Final Rule)
- Proof of business activity in 2020 (you must have been in business before February 15, 2020 to qualify for a PPP loan)
- Legal documents for your business (charter, state licenses)
If your business has employees, you will likely need to provide:
- 2019 and/or 2020 IRS Form 940 for unemployment costs (here)
- 2019 and/or 2020 IRS Form 941 for quarterly salary, wages, commissions, and tips (here)
- 2019 and/or 2020 IRS Form 944 (here)
- 2019 and/or 2020 IRS Form 1099-MISC for any independent contractors that your business paid (not to exceed $100,000 for the year) (here)
- 2019 and/or 2020 IRS Form 1040-C if your business is a sole proprietorship (see more for sole proprietors below) (here)
- 2019 and/or 2020 IRS Form W-3 (not required, but recommended) (here)
- Monthly payroll statements that will provide the following information
- Salary, wages, commissions, or tips (not exceeding $100,000 annually for each employee)
- Any costs for the separation or dismissal of employees
- Any costs for vacation, parental, family, medical or sick leave
- Any state & local taxes assessed on employee compensation
If your business pays for health insurance or retirement for employees, you will also need to provide the following from 1099 or W2 forms:
- All health insurance premiums paid by the business owner under a group health plan
- All retirement plan funding paid for by the business owner
If you are a sole proprietor or self-employed, you will likely need to provide:
- 2019 and/or 2020 IRS Form 1099-MISC for any independent contractors paid, not to exceed $100,000 for the year (here)
- 2019 and/or 2020 IRS Form 1040-C if your business is a sole proprietorship (here)
If you’re applying for a second-draw PPP loan, you will need additional documentation
The above is likely required for all PPP loans, including first or second draw loans, but for a second draw loan specifically you will need to provide the PPP first draw SBA Loan number assigned by your first lender to your approved SBA PPP loan. The SBA will not at this point provide this number to you, and there’s no online database for you to look it up. Currently the only way you can find your PPP loan number is by requesting it from your PPP lender, or consulting your signed PPP loan approval documents, if you have them.
The PPP first draw SBA loan number is a 10 digit number in the following configuration: XXXXXXXX-XX. For more info, read our article on PPP first draw SBA loan numbers.
In addition, for your second draw loan you will need to provide documentation that you experienced at least a 25% reduction in revenue in at least one month in 2020 compared to 2019. There are several ways that are approved to prove this, including tax returns and/or quarterly revenue data. If quarterly revenue data isn’t available, you may still be able to demonstrate the required loss in revenue. Please consult our article on second-draw PPP loans for more details.
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.
Learn more, plus get free reputation monitoring and customer insights when you sign up for Womply Free!