PPP loans: What you need to know

By , Special to The Daily Memphian Updated: January 18, 2021 4:00 AM CT | Published: January 18, 2021 4:00 AM CT

SBA will forgive Paycheck Protection Program loans if all employee retention criteria are met, and the funds are used for eligible expenses.

First Draw PPP loan parameters for businesses that have not applied for a PPP loan before:

The maximum amount of money you can borrow is equal to 2.5 times your average monthly payroll costs or $10 million, whichever is lower.

PPP loans have an interest rate of 1%.

Loans issued prior to June 5, 2020 have a maturity of two years. Loans issued after June 5, 2020 have a maturity of five years.

Loan payments will be deferred for borrowers who apply for loan forgiveness until SBA remits the borrower’s loan forgiveness amount to the lender. If a borrower does not apply for loan forgiveness, payments are deferred 10 months after the end of the covered period for the borrower’s loan forgiveness (either 8 weeks or 24 weeks).

No collateral or personal guarantees are required.

Neither the government nor lenders will charge small businesses any fees.

Who may qualify

 Sole proprietors, independent contractors, and self-employed persons;

Any small business concern that meets SBA’s size standards (either the industry size standard or the alternative size standard);

Any business, 501(c)(3) nonprofit organization, 501(c)(19) veterans’ organization, or tribal business concern (sec. 31(b)(2)(C) of the Small Business Act) with the greater of: 500 employees, or that meets the SBA industry size standard if more than 500;

Any business with a NAICS code that begins with 72 (Accommodations and Food Services) that has more than one physical location and employs less than 500 per location.

Second Draw PPP loan parameters for businesses that have already received an earlier PPP loan:

For most borrowers, the maximum loan amount of a Second Draw PPP loan is 2.5x average monthly 2019 or 2020 payroll costs up to $2 million. For borrowers in the Accommodation and Food Services sector (use NAICS 72 to confirm), the maximum loan amount for a Second Draw PPP loan is 3.5x average monthly 2019 or 2020 payroll costs up to $2 million.

Who may qualify

 A borrower is generally eligible for a Second Draw PPP loan if the borrower: 

Previously received a First Draw PPP loan and will or has used the full amount only for authorized uses;

Has no more than 300 employees;

And can demonstrate at least a 25% reduction in gross receipts between comparable quarters in 2019 and 2020.

Source: U.S. Small Business Administration


Paycheck Protection Program coronavirus small business administration
Christin Yates

Christin Yates

Christin Yates is a native Memphian who has worked in PR and copywriting since 2007. She earned her B.S. in public relations and M.S. in mass communications from Murray State University.


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