Paycheck Protection Program Loans – How It Works

The Paycheck Protection Program (“PPP”) authorizes up to $669 billion in forgivable loans to small businesses to pay their employees during the COVID-19 crisis. All loan terms will be the same for everyone, regardless of which lender they use to obtain their loan. You can submit a loan request on SBA.com® and we will send your loan request to our partner Lendio, which has a network of PPP lenders and will attempt to connect your complete application with one of these lenders. You do not have to use SBA.com® or Lendio to obtain a PPP loan and we encourage you to reach out to any existing banking relationship to try to obtain a PPP loan.

What is a PPP Loan?

  • Small businesses are facing an unprecedented economic disruption due to the Coronavirus (COVID-19) outbreak. On Friday, March 27, 2020, the President signed into law the CARES Act, which provides nearly $350 billion for PPP loans. In early May 2020, Congress provided an additional $320 billion in funding for PPP Loans.
  • PPP loans are an extension of the U.S. Small Business Administrations ‘SBA Loans’ and allow small businesses adversely impacted by the COVID-19 pandemic to obtain financing needed to continue their business operation.
  • Paycheck Protection Program loans provide a direct incentive for small businesses to keep their workers on the payroll and to maintain their operations.
  • PPP loans are eligible to be forgiven provided certain requirements are met. (See here for more information on loan forgiveness.)

Who offers PPP Loans?

  • A PPP Loan can be made by any existing U.S. Small Business Administration lender or by any participating federally insured depository institution, federally insured credit union, Farm Credit System institution, and select Fintech Lenders who are approved by the U.S. Small Business Administration as a 7a lender.
  • The U.S. Small Business Administration has also allowed for Additional Qualified Financial Institutions to be eligible as PPP Lenders under the authority of the U.S. Small Business Administration under CARES Act Section 1102.
  • You are not required to apply with any specific lender. We encourage you to try to apply with your current bank or lender.If you are not able to obtain a PPP loan through your current relationship bank or lender, try our SBA.com® loan request service. SBA.com® is not a lender and you do not have to request a loan through SBA.com® or Lendio to access PPP funds.

How Can SBA.com Help?

  • SBA.com has a large nationwide network/marketplace of approved PPP lenders.
  • With a single loan request on SBA.com®, our partner Lendio can give you access to complete your application with them and submit it to an approved PPP lender for approval. Neither SBA.com® nor Lendio can guarantee that you will be eligible for a loan or that a lender will be willing to make you a loan. Lendio will work on your file to try and make sure your file finds a home regardless of existing credit or banking relationships.
  • This process is easy. You can submit a loan request with us and complete your application with Lendio. Upon completion your application will be submitted by Lendio to an approved PPP lender. Lendio will be your agent in this scenario. This is a brand new program and funds are being deployed at record speed. Please be patient with Lendio and the ultimate lender as everyone is doing the best they can to get things done in a timely manner.
  • After completing your application with Lendio they will submit your request to a lender, if accepted the lender will underwrite the submission and attempt to obtain a PLP number. After a PLP number is assigned Lendio and your lender will be in touch with you for next steps to sign a note and obtain funding. It is important to note next steps are required with your lender and they will be required to underwrite your file for accurateness. Please try and review our content, and guides to ensure your request is smoothly processed.
  • All PPP loan services provided by SBA.com® and Lendio are free to you. See our Advertiser Disclosure for more information on how this process works.
  • If you would like to withdraw your request with Lendio you would do so with them. We are not able to do this because we do not have access to your application.

When can I apply?

  • Starting April 3, 2020, small businesses and sole proprietorship can apply for and receive loans to cover their payroll and other certain expenses through existing U.S. Small Business Administration lenders.
  • Starting April 10, 2020, independent contractors and self-employed individuals can apply for and receive loans to cover their payroll and other certain expenses through U.S. Small Business Administration lenders.

Who can apply?

All businesses – including nonprofits, veterans organizations, Tribal business concerns, sole proprietorships, self-employed individuals, and independent contractors – with 500 or fewer employees can apply. Businesses in certain industries can have more than 500 employees if they meet applicable U.S. Small Business Administration employee-based size standards for those industries.

For this program, the U.S. Small Business Administration’s affiliation standards are waived for small businesses (1) in the hotel and food services industries (click HERE for NAICS code 72 to confirm); or (2) that are franchises in the U.S. Small Business Administration’s Franchise Directory (click HERE to check); or (3) that receive financial assistance from small business investment companies licensed by the U.S. Small Business Administration. Additional guidance may be released as appropriate.

What Do You Need to Complete a PPP Loan Application?

  • If you are applying through your bank or lender, you should reach out to your bank or lender for instruction on exactly what information and materials they need for you to complete your application.
  • If you request a loan on SBA.com® your loan request will be passed on to our partner Lendio and you will need to provide additional information and documentation on Lendio’s platform in order to complete your application.
  • Read more about completing your PPP application with Lendio here.

Where can you learn more?

Sources: SBA.gov, Home.Treasury.gov