If you are an independent contractor or a small business owner, chances are your business may have been negatively affected by the COVID-19 pandemic. These effects may range from just a slight decrease in work, to having to temporarily lay off your employees. Fortunately, through the Coronavirus Aid, Relief, and Economic Security (CARES) Act, the government is providing assistance to keep small businesses afloat during these unprecedented times. The Paycheck Protection Program (PPP) plans to support small businesses by offering loans to those that qualify through the Small Business Administration (SBA).

1. Find out if you are eligible to apply for a PPP loan.

If any of the statements below apply to you, then you are on the right track towards eligibility:

  • “I have a small business that meets the Small Business Administration (SBA) size standards.”
    • These standards are 16.5 million dollars or less in annual receipts for trades businesses/workers.
  • “I have a small business with less than 500 employees, regardless of revenue.”
  • “I am a sole proprietor, independent contractor, or self-employed person.”

If any of the above statements applies to you, then the following statement must also be true to be eligible to apply for a PPP loan:

  • “My business was operational on or before February 15, 2020.”

2. Gather the documents you’ll need.

Be prepared to present documentation to provide information about the status of your business, number of employees, proof of ownership, proof of payroll, and other expenses. Depending on what state your business operates in and the lender you choose, the required documents may vary.

The checklist below will help ensure that you have everything you need to maximize your chances of getting approved for a PPP loan:
[ ] Basic information about your business (address, website, contact information)
[ ] Average monthly payroll expenses
[ ] Details of individual employee and salary information
[ ] All tax forms from 2019 up to the most current
[ ] Proof of your business’s mortgage, rent, and utility expenses
[ ] Article of incorporation or proof of operation as a business
[ ] Internal Revenue Service (IRS) forms that verify all owners of 20% or more
[ ] Proof of active and good standing status
[ ] Bank account information for your business (bank name, account number, routing number)
[ ] A completed Small Business Association Paycheck Protection Program application

3. Complete the PPP loan application.

If you want to get a head start on the process, you can fill out the application before you go to your lender. This way, you will already have everything you need and won’t have to fill out too many additional documents.

You can find the Paycheck Protection Program Borrower Application form on the SBA website.
Almost all lenders will accept this application. If not, they will provide you with the application that they require.

The Paycheck Protection Program Borrower Application is also available in Spanish.

4. Find a lender.

You will need to submit your PPP application and supporting documents to an SBA-approved lender. There are currently 1,800 approved lenders. It’s best to check with your bank first since almost all major banks are approved by the SBA. The bigger the bank, the more likely it is that it is approved. Be aware of scams. You should not be charged to apply for the PPP loan, and should not be asked for private information up front.

Use the Eligible Paycheck Protection Program Lenders Finder to find an approved lender near you.

5. Stay in communication with your lender.

Even though the government is funding the SBA to provide assistance to small businesses across the country, your lender is who will be giving you money directly. It is important to stay in touch with your lender to get updates on the status of your application, and information about your loan amount and disbursement date.

6. After you are approved, get total or partial loan forgiveness.

One of the best parts about receiving the PPP loan is that you will be able to pay your employees and keep your business open with money that you may never have to pay back.

All or part of your loan could be forgiven if you follow these specific guidelines:

  • Your business keeps the same number of employees, and the total amount spent on wages is the same as before the effects of the pandemic. Exceptions can be made for employers that are able to prove that they attempted but failed in restoring the original number of qualified employees.

  • 60% of the loan money is used for payroll, while the remaining 40% is used on mortgage, rent, and utilities for the business.

  • The loan is used within 24 weeks after the date of disbursement, or by December 31, 2020, whichever comes first.

The Payroll Protection Program (PPP) plans to provide a total of $659 billion in loans to small businesses to help keep them afloat during the coronavirus crisis. Depending on how you choose to use it, you can turn those loans into grants, all while being able to keep your crew on their feet.