Which documents do you need to apply for PPP?

behalf-which-documents-you-need-to-apply-for-ppp

Despite the challenges of the past year, things are finally starting to look up. You’ve done the hard work of keeping your business open so far; all you need is a boost to keep things running as the country returns to normal. That’s what the second round of Paycheck Protection Program loans is here to do.

The Paycheck Protection Program Round B, is a Small Business Administration program that’s designed to keep you, your business, and your employees supported throughout the pandemic. These loans can be used to cover the cost of payroll and other approved expenses.

The first round of PPP loans faced some problems. Available funds were limited, self-employed people faced a waiting period.

The second round of loans has been designed to avoid these problems. It should be easy to keep your business running with a potentially forgivable PPP loan in the second round. Here’s some of the PPP Documentation you’ll need to apply for a Paycheck Protection Program loan with Cross River Bank, with information specific to your business type. 

Independent Contractors, Self-Employed People, and Sole Proprietorships with No Employees

Yes, you can apply for a PPP loan even if the only person you pay is yourself. You’ll need to provide the following Paycheck Protection Program required documents:

  • A driver’s license or photo ID
  • Voided check for the account of deposit
  • Form 1040 Schedule C
  • Bank statements covering up to 2/15/2020 to show that you were in business at that point. If possible, print them directly from your bank’s website.

Click here to see examples of the required documentation.

Sole Proprietorships and Self-Employed People with Employees

If you have employees as a sole proprietorship or self-employed person, you need to collect all of the PPP documentation outlined above. 

You’ll also need to provide the Proof of Payroll Form 940 for your employees. If you don’t have a single Form 940, you can also provide four consecutive Form 941 quarterly forms instead. These forms should cover your full calculation period, whether that’s 2019 or 2020. Using these forms may make your application review period longer, since it may require manual underwriting. 

Click here to see examples of the required documentation.

Corporations

Whether you run a corporation or an LLC that files as a corporation, you’ll need to collect the following to apply for a PPP loan:

  • Driver’s license/photo ID
  • Voided check
  • Bank statements that cover 2/15/2020, to show that you were in business on that date. Ideally, use bank statements printed directly off your bank’s website.
  • Copies of Form 1120 or Form 1120-S to show whether you provide health insurance or retirement benefits to your employees. 
  • Proof of Payroll Form 940
  • Form 1040 Schedule C

If you cannot provide a 940, you can provide four consecutive 941 quarterly forms that cover a full year, whether that’s 2019 or 2020. This may delay your filing, since these forms may require manual underwriting. 

Click here to see examples of the required documentation.

Partnerships 

Both companies structured as partnerships and LLCs that file as partnerships alike need to provide the following documents to file for a PPP 2021 loan:

  • Driver’s license/photo ID
  • Voided check
  • Bank statements including 2/15/2020, to show that you were in business on that date. Ideally, use bank statements printed directly off your bank’s website. 
  • Form 1065
  • A copy of Form 1065 Schedule K-1 for each partner with self-employment earnings in box 14a
  • Proof of Payroll Form 940
  • Form 1040 Schedule C

Click here to see examples of the required documentation.

Nonprofits

Nonprofits are also eligible to receive PPP loans if they have people who earn their living working for them. To file for a loan as a nonprofit, you’ll need to provide the:

  • Driver’s license/photo ID
  • Voided check
  • Bank statements which cover 2/15/2020, to show that you were in business on that date. Ideally, use bank statements printed directly off your bank’s website. 
  • Part IX Form 990 if and only if your non-profit files a 990
  • Proof of Payroll Form 940, if you have employees
  • Form 1040 Schedule C

If your non-profit engages with parsonage, or housing allowances for clergy, it’s important to note that only cash payments qualify. In-kind parsonage is not eligible for inclusion. However, you can verify parsonage amounts with alternative methods like:

  • Receipts
  • Cancelled checks
  • Invoices
  • Certification of the amount paid by the religious organization’s authorized representative

Click here to see examples of the required documentation.

Second Draw Requirements

If you’ve already received one PPP loan, you may still be eligible to receive money in the second round. This is known as a “second-draw” loan. To receive a second draw loan, you’ll face stricter requirements and some additional Paycheck Protection Program documents.

First, if your second-draw loan will be more than $150,000, you’ll need to prove that you suffered a 25% loss in gross income between 2019 and 2020. To prove this, you can provide any of the following comparisons:

  • Total 2020 gross income to total 2019 gross income
  • Any quarter in 2020 to the same quarter in 2019
  • If your business began between 1/1/2020 and 2/15/2020, you can compare the first quarter of 2020 to any other quarter in 2020.
  • If your business started quarter four of 2019, you can compare quarter four of 2019 to any quarter in 2020.

Whether you choose to compare annual or quarterly numbers, you can use the following documents to make the comparison:

  • Bank Statements (all credits)
  • Tax Documents (actuals or drafts)
  • Quarterly financial statements

Help Your Business Survive and Thrive With a PPP Loan

The United States is making strides toward mitigating the COVID-19 pandemic, including its economic impacts. Make sure your business is there to support customers now and later, when restrictions lift. Behalf’s partner bank, Cross River Bank, is there to help make the application process as simple as possible. You can apply for a Paycheck Protection Program Round B loan through Cross River Bank online. Keep your business and employees supported and strong in the last few months of lockdown. You’ll be glad you did. 

* This post is for informational purposes only, not financial advice. Any reference to a web site of another party, does not constitute or imply endorsement.