In this 5-minute read:
- What businesses are eligible for emergency SBA/PPP loans?
- Who can help me get an SBA loan?
- How do I know which lenders are eligible SBA loan providers?
- What are lenders looking for?
Businesses across the country (and the world really) are facing financial challenges as COVID-19 causes more people to remain home to help minimize the spreading of the disease. The government has responded with a $350 billion stimulus package for small businesses.
Womply has partnered with various trusted lenders to offer you the best possible rates on small business funding. Whether you need a term loan, a line of credit, or another type of small business capital, we can help! Click here to learn more, or sign up for Womply Free!
As the CARES Act was recently signed into law, small businesses will now be able to get loans under the Paycheck Protection Program (PPP), EIDL, or other emergency SBA loans and grants. These sources of funding are meant to help businesses stay afloat and continue to pay their employees.
However, there may be some confusion as to how your business can apply for and access these loans. This article will help guide you in the right direction for SBA emergency loans.
What businesses qualify for SBA emergency loans?
Generally speaking, all American businesses with fewer than 500 employees may qualify for SBA emergency loans under the PPP. This includes non-profits, independent contractors, tribal businesses, and others that meet the SBA’s size standards.
Depending on the size of the loan that you are seeking and where your business is located, there may be additional requirements as well.
Because of the many caveats and various requirements, several organizations have stepped up to become facilitators in helping small businesses acquire the right loans for them during this crisis.
Who can help my business get a small business stimulus loan?
The SBA has approved hundreds of private lenders to fulfill PPP loans to small businesses.
We have found several institutions and organizations to help guide you through the process.
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Federally insured entities
Any federally insured depository institution, federally insured credit unions, or Farm Credit System that is participating in the Paycheck Protection Program can help you apply for a loan for your business.
Personal banks and lenders can also help guide you through the application process for PPP loans. Again, they must be participating in the Paycheck Protection Plan in order to provide this service.
Other private companies
Several private lenders and organizations that are dedicated to helping small businesses are also becoming facilitators for SBA emergency loans. While not all organizations in this program can directly lend to you, they can help you find the right connections to ensure that you are finding a credible source for your emergency loan.
IMPORTANT NOTE: On 4/3/2020, the SBA issued a brand new PPP application form. It has new questions, clearer instructions, and new rules. If you already filled a PPP application form before 4/3/2020, you will need to do it again. (But you can re-use your original answers).
How do I know if a lender is eligible and part of the Paycheck Protection Program?
It’s important to be wary of the different lenders out there. While we have seen so much good in the world as businesses and communities come together to help one another through this crisis, there are others who may try to take advantage of the situation.
Be cautious as you seek out lenders for your SBA emergency loans and be certain that they are eligible participants of the Paycheck Protection Program.
Many organizations are still waiting for the final approval to become verified lenders of these emergency loans.
Check with your bank or a lender you trust to see if they are offering this service or will be soon. If not, that is when reaching out to a company like Womply that helps connect businesses to eligible lenders can be helpful.
When I find an SBA approved lender, what will they need from me?
As you are searching for a lender or working with an SBA loan facilitator to pair your business up with the right lender, there are a few things you may want to be aware of before you apply for your PPP loan.
Unlike traditional business loans, PPP loans do not require any kind of collateral. But there are other requirements in order to ensure that your business deserves this loan.
Lenders are going to ask for good-faith verification of the following:
- The loan request is necessary for your business due to the challenges of current economic conditions
- Loan proceeds will be used for maintaining payroll or making other essential payments like mortgage, rent, and utilities
- You don’t have a loan application pending already for the same purpose
- You haven’t already received a similar loan for the purpose and amounts of this one
Beyond these good-faith answers, you’ll also need to fill out the application and provide payroll documentation to ensure that the loan gets to the right business.
We recommend preparing for the application process by gathering the following, at a minimum:
- W-9 Tax ID document
- Proof of being operational by 2/15/2020 (You may be able to confirm this with the payroll records from a period that includes 2/15/2020 or a payroll summary.)
- 2018 and 2019 tax returns (or latest available)
- Legal documents for your business (Charter, state licenses, Articles of organization)
- Payroll records for Jan 1, 2019, to present (Forms 940 and/or 941)
- A list of all owners with greater than 20% ownership stakes in your business
- Online banking credentials. This will be used to verify ownership if you are approved for a loan.
- Clean up your books. To apply for loan forgiveness in the future, you’ll need to document the expenses you pay during the eight week period after you receive an SBA PPP loan. Make sure you’re prepared to document expenses, including payroll, mortgage interest, and/or rent and utilities.
How much can I borrow under the Paycheck Protection Program?
One question on every business owner’s mind is likely this: how much of a loan can I get?
Each business can apply for loans up to 2.5 times their average monthly payroll costs or up to $10 million (whichever is less).
This allows business owners to keep paying their employees and keep business operations running as much as possible for the next couple of months. Please note: PPP loans are forgivable (basically they become grants that you don’t have to repay) if you use them for payroll or other approved PPP expenses.
Womply can help you get the small business funding that’s right for you
Womply has partnered with various trusted lenders to offer you the best possible rates on small business funding. Whether you need a term loan, a line of credit, or another type of small business capital, we can help!