How to Apply for Your First PPP Loan in 2021

With the second stimulus package came a top up of the popular Paycheck Protection Program (PPP) loans. This means access to fully forgivable loans for all small businesses with payroll or self-employment income. If this is your first time applying for the PPP, it’s considered a first draw PPP loan. If you already received a PPP loan in 2020, check out our guide on applying for your second PPP loan.

Here, we’ll cover how you can apply and also walk you through the application form for your first PPP loan.

PPP first draw eligibility criteria

If the following statements apply to your business, you are eligible to apply for your first PPP loan.

  • Your business was operational before February 15, 2020

  • Your business is still open and operational

  • You have no more than 500 employees

  • If your business has multiple locations, you have no more than 500 employees per location

Where should I apply for a first draw PPP loan?

Whether it’s your local bank, a community development financial institution (CDFI), or a FinTech, there’s an option for a PPP loan that’s right for you.

An online lender will provide you with the greatest ease of application. They’re equipped to take your information via a streamlined online portal and review your application very quickly.

Local banks are great options if you’re looking for more of a personalized experience.

At Bench, we’re assisting businesses by connecting them with lenders like BlueVine. BlueVine provides a fast online application for the Paycheck Protection Program for both first time applicants and also for second draw applicants, even if you had previously received a PPP loan elsewhere.

The PPP 2 application form 2483 explained

For the second round of PPP loans, first draw borrowers apply with form 2483. We’ll go through the application form box by box. We recommend you follow along by downloading a PPP loan application here. Check in with your lender before filling in the application. Some lenders will require you to submit your information through their online portal as opposed to submitting a paper application.

Part 1: Your business information

PPP1 App (1)

Business structure

Start by selecting the business structure that best represents your business. Try to be as specific as possible. For example, choosing “Sole Proprietor” is going to be better than “Self-Employed Individual”—as even though both could be correct, one conveys more information.

Business name and address

You are required to provide both your Business Legal Name and your DBA or Tradename if applicable. Your Business Legal Name is found on any government forms. A DBA or Tradename is what appears on bank statements or invoices if it’s different than your Business Legal Name. Your Business Address is also found in these documents.

NAICS code

You can find your NAICS code on a website like NAICS codes are self-assigned meaning you pick the code that best suits your business rather than having one assigned to you. Start by searching keywords of what you do or look up a similar business’s NAICS code.

Business EIN/TIN/SSN

Your EIN (Employer Identification Number), TIN (Taxpayer Identification Number), or Social Security Number (SSN) is found on previous tax returns. If you’re having trouble finding this info, follow the IRS’s steps to finding your EIN here. Note that an SSN should only be provided if you do not have a business EIN or TIN.

Contact information

Finally, provide the name, business phone, and email address of the primary contact for the application. This will be who all future communications are directed to.

Part 2: Loan amount calculation

PPP1 App (2)

Average monthly payroll costs

Your loan amount calculation starts with finding your average monthly payroll costs. Your average monthly payroll costs can be calculated using one of the following:

  • the one year period before the loan application

  • the calendar year of 2020

  • the calendar year of 2019

Once you’ve chosen the time period you want to use, follow these steps:

Step 1: Add up the payroll costs for all employees whose principal place of residence is in the United States. Payroll costs include:

  • Salaries, wages, commissions or tips

  • Employee benefits including paid leave, allowance for separation or dismissal, and healthcare benefits including insurance premiums and retirement benefits

  • State and local taxes

  • For the self-employed only: net earnings from self-employment

Step 2: Subtract any compensation paid to an employee or earned as self-employment income in excess of $100,000. This step is required because the PPP sets a cap on salaries of $100,000 per employee. For example, if you have two employees earning $120,000 over the year, subtract $40,000 from your payroll total.

Step 3: Divide the total amount from Step 2 by 12 months and put it in the Average Monthly Payroll box.

Loan request amount

Once you have your average monthly payroll cost, multiply it by 2.5. This will be your loan amount. The exception is if you have an EIDL loan you are refinancing with your PPP loan. To be eligible to do this, you must have received your EIDL loan between January 31 and April 3, 2020. Do not include your EIDL advance, as the advance does not need to be paid back.

PPP loan amounts are capped at $2 million. Put the lesser of your calculated loan amount and $2 million dollars in your Loan Request Amount box.

Number of employees

Add up all employees across all locations and affiliates. There are three main cases where your business and another business would be considered affiliates:

  • If your business controls or has the power to control another business

  • If another business controls or has the power to control your business

  • If a third party controls your business and another business

You can review the full affiliation rules the SBA provided here.

The purpose of the loan

Check all boxes that apply. Businesses that do not run payroll but are still eligible for a PPP loan should check “Payroll Costs.” Self-employed individuals are eligible to take the PPP to cover your self-employment income. This is called owner compensation replacement or OCR and is still considered a payroll cost.

The purpose of PPP loans is to protect paychecks. If you do not select “Payroll Costs” in this section, your application may be denied.

Part 3: Applicant Ownership

PPP1 App (3)

List all members of the ownership that hold 20% or more of the business. If you have more owners than spaces on the application, attach them as a separate sheet.

Part 4: Questionnaire

PPP1 App (4)

Answer each question and initial where indicated. Answering yes to questions 1, 2, 5, or 6 will mean you are ineligible for a PPP loan.

Part 5: Certifying you applied in good faith

On page two of the application form, there are 10 statements. Each statement must be signed to certify you are applying in good faith that these statements apply to your business. Signing on any of these statements later found untrue can result in penalties through imprisonment or fines.

More COVID relief resources

What’s Bench?

We’re an online bookkeeping service powered by real humans. With Bench, you get a dedicated bookkeeper and powerful reporting software for a crystal clear view of your financial health. All of our services are eligible expenses for PPP forgiveness, and we’ll even provide support in applying for the PPP (or getting that loan forgiven). Whatever happens next, we’re right there with you. Get started on a free trial today.

This post is to be used for informational purposes only and does not constitute legal, business, or tax advice. Each person should consult his or her own attorney, business advisor, or tax advisor with respect to matters referenced in this post. Bench assumes no liability for actions taken in reliance upon the information contained herein.

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