Hey Guys, this is Alan Chen with the Free Cash Flow Agency, and I’m a Certified Public Accountant, first of all thank you all for watching this video. In this video, I want to explain to you this hot topic that’s been on everyone’s mind: how do I qualify for the PPP loan for my online business and how do I apply for it?
This is Part 1 of a 3 part series and I hope it will help a lot of struggling business owners out there looking for this type of advice, as I know it can be quite confusing. So first of all what is the PPP or Paycheck Protection Program?
What is the PPP?
The PPP loan was started as a response to the devastating effect that COVID-19 had on small businesses across the nation and the intent to help small businesses be able to maintain it’s current workforce by providing a loan to small businesses. The PPP loan can be used to help fund payroll costs, including benefits, and may also be used to pay for mortgage interest, rent, utilities, worker protection costs related to COVID-19, uninsured property damage costs caused by looting or vandalism during 2020, and certain supplier costs and expenses for operations.
So here are the specific qualifications:
1. you must be a business that was started prior to February 15, 2020
2. Your business is still operational and functioning as of today
3. And you have no more than 500 employees as this program was intended to help out small businesses. There are also specific requirements that will make this into a forgivable loan that we will go through in part 3 of this series.
So one of the questions is how much can my business get from this program?
And the answer is you can get 2.5 times your average monthly payroll cost, up to a maximum of $10 million. So for example, iif your average monthly payroll cost was $100,000, that means you can borrow up to $250,000 through the loan program. So what you can include in the payroll cost calculation is the following: Salary, wages, commissions and tips, up to $100,00 per employee per year, independent contractors do not count toward this- Also you can include employee benefits such as vacation, medical insurance premium cost, and sick leave cost. And lastly you can include state and local taxes you paid on that compensation.
So this loan is pretty awesome, the interest rate is only 1%! And you have 5 years to pay it back. It will cover a period of 8 or 24 weeks that you can elect to help pay for payroll and payroll related cost. And after the 8 or 24 weeks is up, you will even have a grace period of 10 months before you have to start the loan payments.
How do I apply?
There are different ways to do this, and actually from my research and interview of business owners, the fastest way is through who you bank with. So if you bank with Chase for example, the first contact you should make is with your relationship officer at Chase and make sure you let them know that you qualified for the PPP loan and would like to apply through them. If you happen to bank with someone that doesn’t provide PPP assistance or if your bank is too backed up with PPP loan request.
Then I would suggest you go through the SBA’s Lender match program which help pair small business owners with qualified PPP loan lenders. I will make sure to include all the useful links below. If you have any questions about the PPP loan, feel free to drop a comment below and I will answer them for you.
For Self Employed Business Owners
I want to also add a section for self-employed business owners meaning you do not have a workforce. You also qualified to apply for the PPP loan and you are eligible to claim 2.5 months worth of your net profit from 2020 as owner compensation replacement. So for example if you have 120,000 of net profit in 2020 then you are eligible to receive up to 25,000 of that as a loan and also possible get it all forgiven.
Additionally, if your business is looking for an all in one solution to save on taxes and have amazing bookkeeping done on your behalf or if you need more guidance on the PPP loan you can click the link in the description and book a free consultation call with FCF Agency, and we will see if we can be a great fit together.
Look out for Part 2 of the PPP loan series, where we deep dive into how to best use the PPP loan after you receive it! Thank you so much and have a great day ahead!
See more info on SBA funding programs here: