Where to Apply for the Second Round of PPP Loans — Options Explained
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Congress has passed a new round of stimulus that goes into effect the week of January 11, 2021. This includes $284 billion in relief funds for small businesses to be made available through the Paycheck Protection Program.
Read on for updated info on what to expect from the Paycheck Protection Program, how to apply, and who your options for lenders currently are.
What is the Paycheck Protection Program?
The Paycheck Protection Program provides 2-year, 6-month deferment, 1% fixed-rate forgivable loans to help small businesses cover payroll and other operational expenses. This new round of funding is being split into three offerings:
- First draw PPP loans: First time PPP loans for businesses who qualified under the CARES Act but did not receive a loan.
- Second draw PPP loans: Loans for businesses that obtained a PPP loan, but need additional funding (These are limited to $2 million max).
- Return or missed funds: Additional funding for businesses that returned their first PPP loan or did not receive the full amount they qualified for.
Your business qualifies for a first draw PPP Loan if
- Your business was in operation before February 15, 2020
- Your business has 500 or fewer employees (Or) falls under a certain size standard
- No pending loan applications (aside from Economic Injury Disaster Loans)
- The loan request is seen as necessary
Loans are available for up to 2.5 times your average monthly payroll, with a maximum of $10 million if applicable. Up to 8-weeks of payroll, rent, mortgage interest, or utilities and up to 100% of the loan will be forgiven if payroll is maintained. For a full rundown of everything regarding the original PPP, including how to calculate your loan forgiveness, check out our full writeup.
Your business qualifies for a second draw PPP Loan if
- Your small business, nonprofit, veterans organization, agriculture coop, sole proprietor, or other eligible organization has less than 300 employees.
- You must have used or have a plan in place to use your original PPP funding.
- Your business must have at least a 25% reduction in revenues in at least one quarter in 2020 compared to that same quarter in 2019.
How to Apply for a Paycheck Protection Loan
The SBA has provided this standardized downloadable loan application, that you will need to fill out and submit to an SBA approved lender. Depending on your lender, you’ll need to provide some or all of the following documentation with your application:
- Tax returns for at least 2019, but if you have 2 years of tax returns easily available, get those ready.
- Payroll reports that show clearly how you achieved your total loan amount.
- Legal company formation documents or organization legal structure/setup, ownership, etc.
- Verifiable payroll expense documents.
- Payroll summary report with corresponding bank statements.
- Breakdown of payroll benefits.
- Certification that all employees live within the United States and a list of employees who do not live in the U.S. and their salaries.
- Most recent mortgage or rent statement and utility bills.
- Documentation as to how COVID-19 has negatively impacted your business (comparing 2019 to 2020 sales is an easy way to do this.)
If you’re applying for a Second Draw PPP Loan, you will also need documentation that showcases how you utilized or plan to utilize your original PPP funds.
Where to Apply for a Paycheck Protection Loan
The current extension to the PPP is being rolled out a bit more carefully to ensure that the same issues and intelligible applicants will not receive funding. So while applications are now open, they are only being made available through community lenders that can prioritize small business institutions. We recommend checking with your preferred lending institution to see if they are currently accepting applications or intend to in the coming days.
If your preferred lender is not participating, you may want to check out the following options. These are Fintech institutions that we know are partnered with local lenders and are currently accepting applications. Each option comes with its own set of benefits and drawbacks, so you’ll want to be sure that the lender makes the most sense for your business and will allow your application to be processed quickly.
Fintech Companies
The most recent addition to the list of SBA-approved lenders may also be the most promising in terms of functionality and ease of use when applying. The only drawback, similar to larger banks, is that if you don’t currently have an account and utilize financial services through the company, the likelihood you’ll be able to apply any time soon is very unlikely. Additionally, there may be additional limitations regarding the amount you’ll be able to borrow and while many companies have been approved as lenders, not all have rolled out an application just yet.
If you plan to apply through a fintech company we recommend that you do it through one that you already have an account through. This will prioritize your application and ensure that the automated process has enough info to accurately pull from and better your chances of being approved. Check the list below for which companies are currently (or soon will be) accepting PPP applications, and we will continue to update this article as more are confirmed.
Nav
Nav is accepting applications through their partner SmartBiz Loans to match business owners with SBA approved National and Regional lenders. This simplified application is built to be submitted in 15 minutes or less by preparing you upfront to have all the documentation necessary to be approved. If you currently utilize ADP, Paychex, Gusto, Intuit Payroll, or Zenefits, you can have your loan processed more quickly by automatically generating a CARES Act Report for your business. You will need to create a free Nav account in order to be matched with a lender.
Funding Circle
Funding Circle’s PPP Loan application is a hybrid between a do-it-yourself online system and a directly managed application. You’ll start the process by filling out basic information through their new PPP loan portal, which will then be handed off to a Funding Circle account manager who will reach out to you to help complete your application and any necessary supplementary documents. Being handled by an actual person is a nice touch, but depending on how many account managers are available, this may slow down the application process. Additionally, Funding Circle is working with multiple funding partners to process the loans, which may mean you’ll be transferred to one of them if deemed necessary.
Divvy
Divvy is now accepting applications to help you pre-apply with their banking partner, Cross Bank. If you have a Divvy account, your account manager will work directly with you on starting your application, determining the amount you qualify for, and getting the necessary documentation in order. If you’re not a Divvy customer, they still help you submit an application to Cross Bank, just without all the extra assistance along the way. If you’re looking for help in submitting for a PPP loan and are already utilizing Divvy, this may be a great option for you.
Lendio
Lendio’s PPP application is available to those that do and do not have an account. If you have an account, all of the basic information and most of the business and financial information will be auto-filled. If you don’t have an account, you’ll have to add all of that information in yourself, and in both cases, you will need to upload additional documents to support your application. While the process is simple, keep in mind that those with Lendio accounts may take precedence over non-account holders during the approval process.
Small Banks and Credit Unions
If you currently work with a local bank or credit union, the likelihood that you’ll get to work with a real person that much higher. Similar to some of the fintech options, this means you have someone there to help answer any questions, assist with your application, and ensure that you are providing the necessary documentation to receive a PPP loan. The personalized process also means that you’ll have greater insight into the status of your application and if there are any red flags that may be stalling the approval process.
Even if you don’t currently have an account with a smaller bank, this may still be your best option. It may mean that you’ll have to transfer accounts to apply, but the waitlist to apply will most likely be shorter or non-existent compared to larger banks, and the quick, personalized service may mean the difference between you getting funds or not.
Large Banks
Banking institutions such as Chase, Bank of America, and U.S. Bank experienced the greatest influx of applications, as well as the greatest amount of problems in processing the first two rounds of funding. For the current round, larger banking institutions are being delayed in accepting applications in order to help prioritize smaller businesses. They will likely be approved as lenders a few weeks from now, but we would recommend finding alternative lenders for now.
Other Loan Options to Consider
The new stimulus bill also includes more funding for the Economic Industry Disaster Program, including another round of $10,000 grants. The loans and grant funds will not be made available until January 15, 2021, when the SBA switches over to a new online Disaster Loan Assistance Portal. It will be worth checking the status of the program then, but keep in mind that the SBA doesn’t anticipate that process being completed until January 17.
The process to apply will hopefully be simplified, but the necessary documentation to apply will likely remain the same. In order to prepare, check out our full guide on SBA Economic Injury Disaster Loans (EIDL). We’ll be updating it with the new application portal and guidelines once they are released.
Additional Crisis Planning Resources
If you’re looking for more insight into what you can do to help your business survive and thrive through this crisis, check out our recent write-ups listed below.
How to create a plan to save your company in a crisis:
When facing an economic crisis, it can be difficult to think about the future of your business. The need to survive takes precedence over planning and that can lead to both short and long-term problems for your business. But there are steps you can take to save your business and pivot to recession-proof success. Read More.
Why You Should Update Your Budget and Forecasts in the Age of Coronavirus:
Don’t let times of uncertainty lead to panic and rushed decisions. Instead find ways to adapt and plan, starting with reviewing your budget and forecasts. Read more.
Paycheck Protection and SBA Disaster Loan Checklist:
Streamline the loan application process and get your emergency funding faster with the right documents and reports. We’ll show you exactly what you need today to win an SBA loan. Read more.
How to Manage Cash Flow in a Crisis:
Cash flow management in a crisis is absolutely vital. Check out our five tips to improve your cash flow and help your small business survive and thrive. Read more.
