by Dana George | Updated July 25, 2021 - First published on April 22, 2021
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Applying for a PPP loan is easier when you prepare ahead of time.
The American Rescue Plan Act of 2021, signed into law by President Joe Biden on March 11, adds $7.5 billion to the Paycheck Protection Program. If you're a business owner who's been financially impacted by COVID-19, you currently have until May 31, 2021, to apply for a PPP loan. The process is easy and can be accomplished in five steps.
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On the U.S. Small Business Administration (SBA) website, you'll find two links. One helps you find lenders in your area offering PPP loans, and another matches you with a lender.
While there is no "official" minimum credit score required to qualify for a PPP loan, it appears that some lenders do conduct a credit check while assessing your application. If your business is in trouble, but you're worried that your credit score is too low to qualify for a loan, ask the lender two questions:
You may need to shop around for a lender that does not run a credit check.
Like any loan application, a PPP loan asks for basic information, like your name and home address. In addition, you'll need to provide specific information regarding the following:
The application will ask you what percentage of the business you own. If you're a sole proprietor, it's 100%. If you're a co-owner, you'll need to provide information about any individual who owns 20% or more of the business. If you co-own the company, be aware that you'll need a copy of each owner's driver's license, front and back.
Here's a list of other documents that may be requested:
For business owners:
For 1099 independent contractors or self-employed:
Your lender can give you a sense of how long it will take them to process the application. As long as you provide documentation promptly, your loan may be approved in as little as three days. Once your loan is approved, you will be asked to sign loan papers.
The SBA specifies that PPP loans must be funded within 10 calendar days of approval. While there's no need for concern if it takes your lender slightly longer, reports indicate that most lenders meet or beat the deadline.
If your business is struggling, a PPP loan can be a lifeline, a way to get through until the world rights itself. The trick to a smooth application process is to gather any documentation you may need and double-check your application before filing. Application errors will only slow you down and make it more difficult to get funds into your bank account as quickly as possible.
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