Next Steps: How to Apply for the Paycheck Protection Program

Please note: This blog is current to the date of its publication, Tuesday, April 7. For additional updates or assistance navigating these uncertain times, please contact us or visit our SST COVID-19 resource page.


In a previous post, we analyzed federal assistance available to small businesses and nonprofit organizations through the Paycheck Protection Program (PPP), which opened applications for nonprofits on April 3 and will open for independent contractors and self-employed individuals on April 10. Additional guidance released by the Small Business Administration (SBA) includes changes to lending criteria and loan terms, and financial institutions are beginning to process applications as soon as they are able based on the late release of that information.

So, where does your organization go from here? Below, we’ve outlined the practical next steps you should take to successfully apply for funding, but for personalized guidance through the application process, we encourage you to connect with a trusted SST advisor today.

  • Determine eligibility

To be eligible for PPP assistance, small businesses and certain nonprofits must have been in existence on Feb. 15, 2020, have 500 or less employees (excluding independent contractors) and the current economic uncertainty must make the loan request necessary to support ongoing operations. 

  • Identify an approved financial institution

Most large banks, and several smaller banks, are approved by the SBA to process the applications. Several financial institutions are also working with the SBA to get approved in the coming weeks.

  • Calculate maximum loan amount

The maximum loan amount is 2.5 times the average monthly payroll costs for 2019, including salaries and wages, group health insurance benefits, retirement benefits and state and local taxes.

This calculation should exclude compensation more than $100,000 for individual employees, federal taxes and other items based on the SBA criteria. If a business was not in operation for the entirety of 2019, the average payroll cost will reflect the time the business has been in operation. Seasonal employers are able to calculate averages based on different criteria.

The American Institute of Certified Public Accountants (AICPA) has created a PPP Loan Calculator, available here

  • Gather supporting documentation

While financial institutions will require different supporting documentation, some items you might want to gather in preparation for the application include:

  • Copies of payroll tax reports (Forms 941 and 941) for 2019 and Q1 2020
  • Documentation reflecting health and retirement benefits paid by the employer for 2019 and 2020
  • Entity formation documents, including tax exempt determination for nonprofits
  • File the application

Due to the delay in receiving detailed guidance, some financial institutions are still working to finalize their processes, procedures and websites to begin processing applications. A link to the application is available here.

  • Calculate and forecast allowable costs for loan forgiveness

In order for PPP loans to be forgiven, funds must be spent within eight weeks and be used for allowable costs including payroll, rent, utilities and mortgage interest. The portion of the loan that does not qualify for forgiveness will incur a 1% interest rate with a maturity of two years.

Tracking usage of PPP funds is pertinent to ensure you have proper support for the loan forgiveness calculation. This can be done by opening an additional bank account to segregate funds and related expenses or tracking them within your accounting system.

For additional information on new financial legislation, be sure to visit SST’s COVID-19 resource page.

Thanks to SST Partner Emily Cook for providing the content for this blog post.