Small business loans can indeed be a lifesaver for business owners facing the turbulence of the pandemic. As the global and U.S. economies experience an unprecedented downfall, you must take every opportunity you can to sustain your business’s finances as we await reopening. The federal government has extended some opportunities for financial assistance, primarily in the form of programs under the CARES Act. Here’s how to know if you qualify for these assistance programs and how to apply, as provided by leading 401K provider, Ubiquity.
Qualifying for the PPP Loan and EIDL
The Coronavirus Aid, Relief, and Economic Security (CARES) Act has increased the ease with which small business owners can acquire financial assistance amid mandates to close non-essential businesses. Under this legislation, business owners can apply for the loans and grants listed below:
Economic Injury Disaster Loan (EIDL) or Grant
- How to Qualify for the EIDL or EID Grant. (Note: Upon applying for this loan or grant, you will be required to pass a credit check. This is of particular importance for business owners that hold a minimum 20% stake in their company.)
- Your company is comprised of 500 employees or less.
- Your business is a nonprofit, cooperative, agricultural business, or tribal business.
- You are an independent contractor, own a sole proprietorship, or are self-employed in one way or another.
- Your company was established before January 31, 2020.
- The coronavirus pandemic has directly affected standard business operations.
Paycheck Protection Program (PPP) Loan
- How to Qualify for the PPP Loan. (If you wish to qualify for loan forgiveness, funds disbursed from the PPP loan can only be used to pay for payroll expenses, rent, and utilities.)
- Your business was established on or before February 15, 2020.
- Your business is comprised of up to 500 employees.
Self-employed individuals also qualify (sole proprietors, independent contractors, etc.) How to Apply for Financial Assistance
- After confirming your eligibility, you can apply to the PPP loan, or the EIDL or EID grant. Follow the instructions below to fill out an application. Collect the appropriate documentation:
- Tax information authorization
- Federal income tax returns
- Schedule of liabilities
- Personal financial statement
- PPP Loan:
- Driver’s license (a color copy of either side of the license must be submitted)
- The past year of the payroll register
- 944 annual tax filings
- 941 Quarterly tax filings
- One year of bank statements
- Download and fill out the appropriate application form.
- Note: When applying to the EIDL, make sure to check the box asking whether you would prefer to be considered as an applicant for the EID grant as well.
You can expect disbursements from the EIDL about 21 days following approval, and approximately 10 days for the PPP Loan. The CARES Act has also provided tax deadline extensions and further options for business interruption insurance and paid sick leave, in case the funding runs out early. If you are still in need of assistance, contact a financial advisor. An expert financial advisor will assist you in developing an effective strategy for keeping your business financially secure as we endure the tragedy of this pandemic. Get in touch with a financial advisor to restore your business’s financial health today.