What is a PPP loan?

The Paycheck Protection Program (PPP) was established by the U.S. federal government to aid businesses that were struggling to pay their workers during the coronavirus pandemic. In 2020, Congress passed the PPP loan, which included two rounds of funding for American business owners. This funding could be used for payroll, operating expenses, worker protection costs, and to pay for mortgage interest, utilities, and/or rent.

According to the Small Business Administration, the amount of funding a business could receive up to two months of its monthly payroll costs, plus an additional 25% of those costs. Fortunately, PPP loans can be fully forgiven if a business has followed the program’s guidelines and the loan has only been spent on the expenses listed above.

Requirements for qualifying for a PPP loan.

To qualify for a PPP loan, a business must meet the following requirements:

  • In business before February 15, 2020.
  • Has fewer than 500 employees (if your business has multiple locations, no more than 500 employees per location).
  • Must be able to prove a 25% decrease in revenue from January-March 2020.
  • Your business is still operational and open.


If you are an independent contractor, you must have a tax-ready 2019 or 2020 Schedule C to be eligible for a PPP loan. Ensure this includes all information including your net profit. Similarly, sole proprietors must also have a tax-ready Schedule C. However, you do not need to include net profit if you have employees on payroll. Instead, you must submit payroll tax forms 940 and 941/944. This requirement also applies to S and C corporations.

Ensure you have all documents ready before applying for a PPP loan.


Important dates concerning PPP loans.

As many businesses have been affected by COVID-19, it is important to be aware of all application deadlines for funding and loan forgiveness.

The First Draw PPP loan deadline to apply for funding was extended to March 31, 2021. Along with the PPP authorization, which was extended to June 30, 2021, under the PPP Extension Act of 2021.

Requests for loan increases began on January 11, 2021, and ended on March 31, 2021.

The Second Draw PPP loan deadline to apply for funding was March 31, 2021.

Regarding loan forgiveness – you may apply once the loan amount you request to be forgiven has been used. Borrowers have up to 10 months after the end of their loan’s covered period to apply. However, if the borrower does not apply for forgiveness within this 10-month period, the PPP loan payments will not be deferred.


Top PPP loan alternatives

More SBA loan products

Businesses that may have been denied a PPP loan, run out of their loan, or missed any deadlines still have more options to obtain capital. The SBA offers other loan products including 7(a) loans, 504 loans, and microloans. A 7(a) loan is the SBA’s most common loan program which provides small businesses with funding to purchase equipment, real estate, refinance existing business debt, and more. A 504 loan is available through CDCs and provides financing for fixed assets that aid in business growth and job creation. Lastly, a microloan aims to help small businesses and certain non-profits in their expansion efforts.

Alternative financing options

Alternative lenders offer a variety of financing options to small businesses at lower costs than traditional lenders. One option is a merchant cash advance which allows businesses to receive a lump sum of working capital in exchange for a percentage of their credit or debit sales. Another option is invoice factoring. With invoice factoring, a business sells its outstanding invoices to an alternative finance company. This company will send the business between 70-90% of the invoice total – which can be immediately used for working capital.

Alternative financing options may be beneficial for businesses that can need/want working capital fast. At CFGMS, we can fund your business in as quick as 24 hours, with no personal capital required. We offer multiple products such as invoice factoring, merchant cash advances, purchase order financing, and more. The CFGMS team works to offer businesses custom funding solutions to help reach and exceed their business goals.