Did you receive a Paycheck Protection Program (PPP) loan to help your business weather the coronavirus storm? Although that program has ended, it’s time to take the next important step: getting your loan forgiven.
Currently, all borrowers who were funded need to apply for loan forgiveness with their lender. Now, however, business owners will be able to apply for forgiveness directly with the Small Business Administration (SBA). This option will be available only to borrowers with loans of $150,000 or less -- which is 95 percent of all loans issued in 2021.
PPP by the numbers
The PPP is one of the largest economic stimulus packages created by the federal government, part of the $2 trillion Cares Act. During the coronavirus pandemic and the economic shutdown, the SBA approved 11,823,594 PPP loans for a total of $799,832,866,520 through 5,467 lenders.
SmartBiz customer violinist and music instructor Paul Hauer describes how he came to apply for a PPP loan.
“When it was clear that my business was going to be deeply impacted by the pandemic, I explored funding options. My tax advisor told me about PPP and that I could qualify because I filed a Schedule C. I started the online application, and the rest wasn’t that hard.”
SBA forgiveness portal details
The SBA PPP Direct Forgiveness Portal is live for PPP Borrowers with loans $150k and below.
The new forgiveness platform began accepting applications from borrowers on August 4, 2021.
Documents to apply for forgiveness
Applying for forgiveness requires paperwork. Get started and gather the following details and documentation:
- Name of your business: business legal name, DBA, trade name (if applicable)
- Business Tax Identification Number (TIN): Social Security number (SSN) or Employer Identification Number (EIN)
- SBA loan number (may be referred to as PLP Number)
- Your PPP loan amount
- EIDL advance amount (if you got one)
- EIDL application number (if you applied)
- Number of employees at the time of your PPP application
- Number of current employees
- PPP loan disbursement date (The day your application was funded)
- Payroll schedule
- Cost of other payroll expenses (employee health insurance, employee retirement programs, etc)
- Cost of covered non-payroll expenses
- The 24-week covered period
- Documentation to support a 25% drop in revenue from 2019 to 2020 (applicable for 2nd draw borrowers)
Forgiveness support from the SBA
Borrowers that need assistance or have questions should call the SBA at (877) 552-2692, Monday – Friday, 8 a.m. - 8 p.m. EST. This specialized team is on hand to help clear up any issues and guide business owners.
The SBA and entrepreneurs
SBA Administrator Isabel Casillas Guzman shares additional details in an SBA press release:
“These entrepreneurs are busy running their businesses and are challenged by an overly complicated forgiveness process. We need to deliver forgiveness more efficiently so they can get back to enlivening our Main Streets, sustaining our neighborhoods, and fueling our nation’s economy.”
SmartBiz forgiveness process
SmartBiz Loans customers with PPP loans of $150,000 or less -- which is 95 percent of all loans issued in 2021 – can use the new SBA forgiveness platform if the lender that funded the loan opted in to direct forgiveness.
Borrowers that need assistance or have questions should call the SBA at (877) 552-2692, Monday – Friday, 8 a.m. - 8 p.m. EST.
Applications for forgiveness of PPP loans of $150k or more may not be eligible to have their application for loan forgiveness process through the SBA platform. Please reach out to your lender for more information about their forgiveness process.
Funding beyond PPP
SBA loans have low rates, long terms, and very low monthly payments. It’s a government-guaranteed small business loan with a long-term and a low-interest rate.
Many banks and other financial institutions offer SBA loans, but their process, requirements, and fees can vary. These government-guaranteed small business loans are known as the “gold standard” with low rates, long terms, and very low monthly payments.
Advantages of SBA 7(a) loans
An SBA 7(a) loan has several advantages compared to other options including:
- Low interest rates
- Long terms
- Very low monthly payments
- Available for many uses
- Can help build business credit
- No prepayment penalty
- Available nationwide
Requirements to apply for an SBA 7(a) loan
Lenders and loan programs have unique eligibility requirements for an SBA loan. For example, some lenders may require a business plan while others do not. (SmartBiz Loans does not require a business plan). Requirements for an SBA loan facilitated by SmartBiz include:
- Time in business must be above 2 years
- Business owner’s personal credit score must be above 650
- The business must be U.S. based and owned by US citizen or Lawful Permanent Resident who is at least 21-years old
- No outstanding tax liens
- No bankruptcies or foreclosures in the past 3 years
- No recent charge-offs or settlements
- Current on government-related loans
To start an SBA 7(a) loan application, visit SmartBiz Loans. You’ll know in about 5 minutes if you’re pre-qualified with no impact on your credit score. SmartBiz Loans works with a network of banks. We match you with the lender most likely to fund. You won’t waste time going from bank to bank.