Update Feb. 22, 2021: From Feb. 24 to March 9, only businesses with 20 or fewer employees will be allowed to apply for Paycheck Protection Program loans. This move from the Biden administration is an attempt to provide access to businesses that previously struggled to obtain PPP loans. Additionally, some of the eligibility restrictions on who can apply for a PPP loan have been lifted. Read more here.
The Paycheck Protection Program reopened to all eligible small businesses on Jan. 19, 2021. The revived program has been expanded to include new business types and allow for a wider use of loan funds. It also established a second-draw program for hard-hit borrowers who need help beyond their initial PPP loan.
Business owners need to apply through an SBA-accredited lender, and provide sufficient documentation to show they qualify and help determine the loan amount.
Having the correct paperwork at the onset is critical to securing a PPP loan. If you submit a PPP loan application that is incomplete or otherwise incorrect, you’ll have to reapply, and you’ll go to the back of the queue when it comes to loan application consideration.
We’ve compiled a checklist of all the documents that an SBA lender will likely ask of you when applying. Each SBA lender may have a slightly different application process so check with your lender before submitting an application to see exactly what they’ll need.
Standard Small Business Documents and Forms Needed for PPP
Small business owners applying for a PPP loan should come prepared with the following:
Official PPP Loan Application Form
- Business name, DBA, business address, EIN/SSN, and contact information
- Average monthly payroll (learn how to calculate your average monthly payroll yourself), loan request amount, number of employees, and loan purpose
- Ownership information for all owners of 20% or more of the applicant business
- Good faith certifications that your business has been affected by the coronavirus pandemic
Your PPP loan amount is based on your payroll costs from either calendar year 2019 or 2020. Most businesses can borrow 2.5x your average monthly payroll but those in the food and accommodation industries can receive up to 3.5x average monthly payroll. First-draw PPP loans are capped at $10 million. Second-draw loans are capped at $2 million.
Businesses applying for a second-draw loan do not need to provide additional payroll documentation if they use the same lender and payroll period as their first loan.
All other borrowers will need the following paperwork to demonstrate payroll:
Federal Tax Forms
To demonstrate your payroll, you must provide the relevant tax forms for your selected payroll period.
Official forms recommended include:
- IRS forms: Form 1040 (Schedule C or F), Form 941, Form 1065 (Schedule K-1), Form 1099-MISC, Form 1120, Form 990 or 990-EZ, Form W-2, Form W-3, Form 943, or Form 944
The exact forms required will depend on your business type. For example, an independent contractor or self-employed person with no employees, needs to provide their IRS Form 1040 Schedule C, Form 1099-MISC, and Form 1099-K.
Other Payroll Documents
In addition to federal tax forms, borrowers may also need to provide:
- State and local tax forms, including unemployment tax forms
- Records for employer-provided benefits such as insurance and retirement contributions
- Invoices, bank statements, or payroll documents to show the business was in operation on Feb. 15, 2020.
If you use payroll processing software or a PEO, it may offer special PPP reports that will show gross wages, tips, vacation, benefits payments, and taxes.
Revenue Reduction Documentation
Small business owners can get a second PPP loan if they’ve lost at least 25% in annual gross receipts in 2020 compared with 2019, or for any quarter of 2020 compared with the same quarter in 2019. Gross receipts include all revenue from all sources, excluding net capital gains and losses.
You will need to provide the following documents to show revenue loss:
- Quarterly financial statements
- Quarterly or monthly bank statements
- Annual IRS income tax filings appropriate for your business type
You don’t need to show revenue loss when you apply if you borrow less than $150,000, but you do need to provide this information before applying for loan forgiveness.
All owners listed on the application will need to include a color copy of a government-issued ID (front and back), such as a driver’s license.
The Bottom Line
The above forms and documents should prepare you for the PPP loan application process. Be sure to stay in touch with your preferred lender throughout your time applying for a loan, from first contact on, to ensure you have submitted everything you need in order to secure your loan proceeds in a timely fashion.