As the US government, Small Business Administration and banks prepare to dole out guaranteed SBA loans to business owners who were impacted by Coronavirus, just how do businesses go about applying for Payroll Protection Program loans?

That is the $349 billion question.

Just hours before the CARES Act’s “Payroll Protection Program” was due to launch, major banks, including JP Morgan, said they were concerned about federal guidance and wouldn’t be ready to accept applications for the SBA loans. Treasury Secretary Steve Mnuchin said things would move forward on April 3 regardless. Business owners, meanwhile, are still searching for answers.

As a small business ourselves, we’re here to answer as many of those questions as we can.

UPDATE: The government recently added $310 billion to the Payroll Protection Program and Fundera is accepting PPP loan applications. You can apply here.


What Is The Payroll Protection Program?

The Payroll Protection Program, or PPP, is an element of the recently-passed CARES Act, which allocates $349 billion to forgivable small business loans. This is designed to get small businesses with 500 employees or less, and indepenent contractors and sole proprietors, money to deal with the devastating impact of Coronavirus.

Specially, these loans, which take the form of fully-backed SBA loans handed out by banks and online lenders, are meant to cover the costs of payroll and other overhead like rent and utilities over about a two and a half month period.

Businesses are being encouraged to keep on their current employees, or re-hire ones who have already been let go, since the government will effectively cover those costs.

This is different from the SBA’s Economic Disaster Relief Loan, or EIDL, which is also available to small businesses. That loan, while it comes with some special terms for those businesses impacted by Coronavirus, is meant to be paid back albeit with very favorable terms. However, by applying, small businesses and independent contractors can receive a $10,000 grant, even if you are not approved for the loan. This $10k does not have to be repaid. We recommend you apply for this as well.

But now, on to the Payroll Protection Program, which will be the most beneficial loan for many businesses with employees.


How To Apply For The SBA Payroll Protection Loan

If you know the particulars of The CARES Act and the Payroll Protection Program and just want to know how to apply, here’s what to do.

The Treasury Department has put out a handy guide, but it doesn’t include specifics about where and how to get the loan.

Banks that will participate in the Payroll Protection Program include lenders approved by the SBA, for which you can find a full list here. Banks which are FDIC insured are also being encouraged to hand out these loans. And online business lenders like Kabbage, Fundera, and Live Oak Bank say they, too, are working to accept applications for the Payroll Protection Program.

Online Lenders Offering an SBA Backed Payroll Protection Loan

Since the government is encouraging people to sign up for these loans online due to social distancing, online lenders may be better equipped to handle the process.

Online lending partners who say they will accept PPP loans [check back for updates]:

  • Kabbage— you can apply now with them, but they list a 3-5 day response time and had some glitches in uploading documents with call centers overloaded… though this is an official application
  • Fundera— you can sign up to begin the application process and they will submit your app to a SBA-backed bank that has to capacity to handle the loan
  • Boefly— a little known bank backed by ConnectOne Bank in New York, which was one of the first to issue a PPP loan last Friday, is now accepting applications and has been very communicative throughout the process.
  • Kapitus— a lesser known lender, Kapitus has tons of updated information regarding the PPP and says it is working with banks to fund these loans
  • Live Oak Bank— looks like this is only available to current Live Oak customers

When you visit any of these sites, make sure to look for “Payroll Protection Program” guidance, as they also dole other forms of SBA loans. Those might be good options for you, too, but the Payroll Protection is what you want right now.


SBA Approved Lenders

Local SBA lenders will also accept applications. But their processes will be more disparate and will vary greatly among each bank. Click here for a full list of local SBA lenders in your state.


Banks Who Will Give Out a Payroll Protection Loan

All of the big banks say they, too, will accept applications for Payroll Protection Loans.

That includes JP Morgan, which said they wouldn’t be ready to accept applications on Friday.

Chase Bank has some guidance, but not application yet. Here’s the messaging they have on their website:

“We are making essential updates to improve the Paycheck Protection Program application experience.”

Bank of America has their application online, however it is only open to current Bank ofAmerica customers who have either a business checking, loan or credit card account with them.

Wells Fargo is now accepting a signup form from business customers. This is not the full application for the Payroll Protection Program. Wells Fargo says it will contact customers who fill out the form within few days. Previously, Wells Fargo had said they would only dole out $10 billion worth of loans due hitting to their regulatory asset cap, which limits the amount of loans they can give out relative to their reserves, but the Federal Reserve lifted this restriction.


Application Requirements

The SBA put out guidelines and a sample application earlier this week, but this is not the application banks and online lenders will use. Rather, each bank will offer its own application– these are believed to be short and similar to what the SBA put out.

General Information

In general, you’ll have to provide basic business information, including your EIN (or SSN for sole proprietors and self-employed individuals), address, and contact information.

“Payroll Costs”

Most specifically, you’ll be asked to provide your average monthly “payroll costs” over the course of the last 12 months, likely as of January 31, 2020. You can then multiply that number by 2.5. You will be eligible for a loan at this amount up to $10 million.

There is much debate over how to define “payroll costs” for the purpose of this loan. Included is employee salary, wages and tips, along with benefits and state and local taxes on those wages.

It does not include payments to 1099 independent contractors who would otherwise be employees. This was updated in the Treasury’s most recent guidance.

However, individuals can begin to apply for those benefits as independent contractors and self-employed on April 10. This is meant to cover their expected income during the two-month period.


You’ll also be asked to assert that you haven’t received other loans for a similar purpose, had your business disrupted by Coronavirus, and some other disqualifying items.


SBA Payroll Protection Program Loan Foregiveness

So now you got (or at least applied for) the loan.

How do you get the loan forgiven?

The bill states that as long as the funds are used to cover “payroll costs,” rent, mortgage and utilities, and you keep on the same number of employees (or more) through June 30, you can apply to have the loan forgiven. The government will pay the banks for the full amount of the loan.

It remains unclear what the exact process to apply for loan forgiveness. But the guidelines are clear– as long as you keep your employees on the payroll, or re-hire the ones you let go, and use the funds to pay their salaries, rent, or utilities, you can have the loan forgiven.

The portion of the loan that is not forgiven comes with 1% interest and must be repaid within two years.

There is no personal guarantee for the loan and other usual SBA restrictions are being waived for this purpose.



What can I use the loan for?

The SBA's Payroll Protection loan can be used to pay for employee salary, wages, commissions and tips, benefits, state and local taxes on compensation, and rent, utilities and other overhead.

What is the maximum amount of the PPP loan?

The Payroll Protection Program loan is capped at $10 million.

How much salary is covered?

Employee salaries are covered up to the prorated portion of $100,000.

I'm an independent contractor, can I apply?

Yes, the SBA is extending this loan offer to independent contractors and self-employed individuals to cover essentially their own salary during this period.

When can I apply?

Small businesses and sole proprietors can begin applying for the Payroll Protection Program on April 3, 2020. Sole proprietors and independent contractors can begin applying for the Payroll Protection Program on April 10, 2020.

What is the deadline to apply for the PPP loan?

You can apply for the loan up until June 30, 2020.


Keep checking this page for updates once loan applications go live.