The US government established the Paycheck Protection Program (PPP) to offer financial support to small businesses impacted by the COVID-19 outbreak. The initiative was created to assist businesses in paying other necessary expenses while keeping their staff on the payroll. Can you, however, obtain a PPP loan to launch a business? Both yes and no are the responses.
Businesses that were already formed before to the epidemic were the main beneficiaries of the PPP loan. However, you can be qualified for a PPP loan if you launched your business before February 15, 2020. It’s crucial to remember that the loan is only meant to help firms that were operating before the outbreak with payroll and other necessary costs.
On August 8, 2020, the PPP loan program came to an end. However, as part of the coronavirus relief package, a fresh round of PPP money was authorized by Congress in December 2020. The deadline for the second round of PPP funding, which opened in January 2021 and runs until May 31, 2021. Do You Need to Repay the PPP Loan?
If the money is utilized for eligible costs, such as payroll, rent, utilities, and other necessary expenses, PPP loans may be totally forgiven. However, the loan must be repaid with interest if the money is not put toward allowable costs. The loan has a two-year term and a 1% interest rate.
The Small Business Administration (SBA) also offers financial aid through the Economic Injury Disaster Loan (EIDL) program. The EIDL grant, in contrast to the PPP loan, cannot be forgiven and must be repaid with interest. The grant, however, is not required to be paid back.
Businesses who were in operation before February 15, 2020, have less than 500 employees, and have endured financial difficulty as a result of the pandemic are eligible for PPP loans. Additionally, sole proprietors, independent contractors, and self-employed people may be eligible for a PPP loan.
In conclusion, even if the PPP loan was not explicitly created for start-up companies, if your company was founded before February 15, 2020, you can still be qualified for one. It’s crucial to remember that the loan is only meant to help firms that were operating before the outbreak with payroll and other necessary costs. Additionally, until May 31, 2021, the second phase of PPP money is accessible.
Yes, self-employed people are eligible to qualify for PPP loans. Any small firm with 500 or less employees, including sole proprietors, independent contractors, and self-employed people, is eligible to apply for a loan.