CARES Act Paycheck Protection Program 2021

  • 100% loan forgiveness*
  • Total loan amount up to $2 million
  • 2-years terms & 1% fixed interest rate
  • Eligibility extended to more small businesses
  • Funds to cover payroll, rent, utilities, operation costs, and more
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Paycheck Protection Program (PPP)

The new Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law on December 27, allocating $900 billion in federal relief funding for individuals and small businesses hurt by COVID-19.

From that total, $284 billion has been designated for the updated Paycheck Protection Program led by the Small Business Administration (SBA) and guaranteed by the U.S. federal government.

What did the PPP Flexibility Act change?

1. PPP borrowers must now use at least 60% of the PPP loan amount on payroll (down from 75%).

2. PPP borrowers may use up to 40% of the PPP loan amount on other permitted expenses (up from 25%)

3. Forgiveness period has been extended to 24 weeks (up from 8 weeks) or until December 21, 2020, whichever comes first.

4. Loan maturity has been extended to 5 years (up from 2 years).

5. PPP borrowers must now apply for PPP loan forgiveness within 10 months from the day that their ‘forgiveness period’ ends, otherwise they will not be eligible. Prior to the PPPFA, there was no such time limit.

6. No penalty for businesses that were unable to rehire employees. If a business can prove it tried to rehire but was unable to do so, it can still be eligible for loan forgiveness.

Has the PPP run out of funds?

  • On April 16, 2020, the Paycheck Protection Program announced that it had officially run out of funds.
  • On April 22, 2020, members of Congress approved an additional $310 billion injection into the PPP.
  • On August 8, 2020 the PPP officially closed.

*On December 27, 2020 a new PPP was signed into law, allocating another $284 billion in small business loans. Applications are expected to open around mid-January 2021 (to be confirmed).


Is my business eligible for a PPP loan?

Qualification criteria for the new SBA Paycheck Protection Program vary slightly depending on whether you received a loan under the original PPP.

If you did not receive a PPP loan in the first or second round:

You can qualify if your business can prove a 25% drop in revenue between any quarter in 2019 and the same quarter of 2020. You must also be classified as a “small business” as defined by the SBA. This includes all registered businesses with up to 500 employees* that were active on Feb 15th, 2020, or during a 12-week period between Feb 15th 2019 and Jan 1, 2021 (for seasonal businesses).

Also eligible: Nonprofit organizations, veterans organizations, Tribal business concerns, small agricultural cooperatives, sole proprietors, self-employed individuals, independent contractors, some small news organizations, destination marketing organizations, and housing cooperatives.

If you did receive a PPP loan in the first or second round:

The same criteria above apply, with the one main difference being the business must have fewer than 300 employees.


*Note that affiliation standards will be waived for businesses that operate in the food and hotel industries, franchises in the SBA’s Franchise Directory, together with organizations that have received any financial aid from small business investment companies licensed by the SBA.

How much can I borrow?

You can receive up to 2.5x the average monthly payroll costs from 2019 or 2020. Funds provided for payroll are capped at $100,000 annualized per employee (any non-cash benefits like health care, pension, etc are not included under the cap). The total loan amount is capped at $10 million for new applicants and $2 million for second-draw borrowers.


Independent contractors paid via 1099-MISC forms do not count as part of the business’s payroll, since they can apply for the PPP loan themselves. Businesses that only employed independent contractors can submit a request for a loan based on compensation withdrawn by the business owners.


  • For businesses not operational before July 1, 2019: The max loan amount will equal 2.5x the average monthly payroll costs incurred for January and February 2020.
  • For Seasonal Employers: Loan amounts are calculated the same way, but for the 12-week period beginning either February 15, 2019 or March 1, 2019 (decided by the loan recipient) and ending June 30, 2019 or any 12-week period beginning February 15, 2020 and January 1, 2021


Use our PPP loan calculator to see how much you can get.


**Update: Loans taken under the new PPP for 2021 are tax deductible.

What can the funds be used for?

Funds from the SBA Paycheck Protection Program are there to be used to cover payroll and/or mortgage interest, rent, or utility costs incurred before February 15, 2020.*


Payroll costs include employees':

  • salaries, wages, commissions, tips;
  • payment for vacation, parental, family, medical, or sick leave;
  • insurance benefits including dental and disability;
  • allowance for separation or dismissal;
  • payment for employee benefits;
  • taxes assessed on compensation of employees

Other eligible expenses:

  • certain operating expenses
  • business property damage
  • essential supplier costs
  • certain worker protection expenses


Note: PPP program is applicable to cover only payroll costs for employees whose principal place of residence is the United States.  As of the passing of the PPP Flexibility Act, no more than 40% of the forgiven amount may be for non-payroll costs (i.e. mortgage interest, rent, or utility costs).


*Pay close attention to the eligibility requirements for loan forgiveness listed on this page.

What if I already laid off some employees? Can I still qualify for PPP loans?

Yes, as long as you rehire those employees before June 30, 2020.

**Update: As of the passing of the PPP Flexibility Act, this rule has been adjusted so that if a business can prove that it tried to rehire its employees but was unable to do so, it may still be eligible for loan forgiveness.

What happens if I use the funds for other purposes?

The U.S. government may pursue criminal charges against you if they find that the funds were used for fraudulent purposes.

Do I need to provide a personal guarantee?

No, you do not need to provide a personal guarantee. However, if funds are used for fraudulent purposes, a criminal charges against you may be pursued by the US government.

Am I eligible for PPP loan forgiveness?

In order to be eligible for loan forgiveness, you'll need to meet the following criteria:

  • Funds must be used for the intended purposes (listed on this page) within the 24 weeks immediately following your acquisition of the loan amount or by December 31, 2020 (whichever comes first);
  • Employee and payroll levels must be maintained;
  • Any changes made to the number of full-time employees or salaries between February 15, 2020 and April 26, 2020 must be restored by June 30, 2020

**Update: As of the passing of the PPP Flexibility Act, this rule has been adjusted so that if a business can prove that it tried to rehire its employees but was unable to do so, it may still be eligible for loan forgiveness.

How can I apply for PPP loan forgiveness?

You can request for loan forgiveness via the lender that is servicing your loan. The lender must make a decision on your forgiveness request within 60 days. The request should include the following documents* for the 24 week period following this loan verifying:

  • The number of full-time equivalent employees and pay rates
  • Covered mortgage interest payments
  • Covered rent payments
  • Covered utilities payments

You will also be required to certify that:

  • The documents are accurate and true
  • You used the forgiveness amount to keep employees and make eligible mortgage interest, rent, and utility payments

*Note: Under the new PPP launching in 2021, borrowers of up to $150,000 may submit a simplified loan forgiveness application providing the same information, but limited to a single page.

**Update: As of the passing of the PPP Flexibility Act, borrowers must apply for forgiveness within 10 months from the day that their ‘forgiveness period’ ends, otherwise they will not be eligible.

When do I start paying back & how much?

You will only need to start making payments after the 6-month deferral period, which starts from the time that you receive the loan.

If you qualify for a Paycheck Protection Program loan forgiveness, you will only be required to pay back the interest on your loan. Your loan forgiveness will be reduced if the funds are used for any purpose other than those listed above.

What are the interest rates?

The interest rate on all Paycheck Protection Program loans is a fixed rate of 1%. While payments are deferred for 6 months, interest will still accrue during that period.

When is my loan due & can I pay my loan before?

5 years from the time you acquire the funds. And yes, you can pay before. Moreover, there are no prepayment penalties or fees.

How quickly can I get the funds?

Once the loan is approved, lenders are required to disburse funds within 10 days of loan approval.

What documents are required to apply for a PPP loan?

*For the new PPP launching in 2021, applicants should provide the documents listed below for the year 2020

As part of your application, you’ll need to provide the following:

  • Completed Paycheck Protection Program application form
  • Driver's license or other form of government identification
  • Documentation verifying the number of full-time equivalent employees on payroll, dollar amounts of payroll costs, and that payroll taxes were paid
  • 2019 payroll statement
  • 2019 P&L statement
  • For self-employed individuals: IRS 1040 Schedule C for 2019
  • For all other businesses: 2019 business tax return + IRS Form 941 (per each quarter of 2019) or IRS Form 944 (annual for 2019)

You will also be required to certify that:

  • The funds will be used appropriately for business-related purposes as specified in the loan application;
  • The PPP loan will be received only once;
  • You will provide to the lender documentation that verifies how the money was spent.

Can I submit 2018 tax returns if I haven't filed 2019 tax returns yet?

Yes, you can. However, we would recommend to file 2019 taxes online as soon as possible and add them to your application to reduce the chances of additional bureaucracy down the line. If you do submit 2018 tax returns, make sure you add as much information on 2019 as possible (employment tax forms, P&L, etc).

Do I need to submit 1099-MISC or 1065 Schedule K-1 forms with my application?

No, if you are a self-employed individual, you should only submit your 1040 Schedule C, which would include the earnings derived from the 1099 or K-1 forms.

Will it cost me more to get a PPP loan through Become?

In short, no. Loan terms are the same for all small businesses regardless of where they obtain the funds.

Which organizations provide PPP loans?

Paycheck Protection Program loans are available through any existing SBA lender. That includes alternative lenders, banks, as well as federally insured depository institutions/credit unions and Farm Credit System institutions.

Become has many lending partners that can facilitate your PPP loan, we make the process as quick, easy and as hassle free as possible.

The CARES Act includes Disaster Loans and PPP loans; can I get both?

Yes, but only if you use the loans for different expenses. While PPP loans can be used only for payroll and/or mortgage interest, rent, or utility costs, Economic Injury Disaster Loans (EIDLs) can be used for other pre-existing business operating expenses, including the expenses that the PPP loan may not fully cover. 


Note, if you receive EIDL loan before applying for the PPP loan, you should include your EIDL outstanding balance to your requested PPP loan amount.

How many loans can I take out under this program?

Only one. If you've applied via multiple sources and received funding from one of them, you should withdraw all other applications to avoid getting funded twice.

Have more questions?

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