The Paycheck Protection Program (PPP) is designed to support American small businesses with eight weeks of cash support during the COVID-19 pandemic. If you are a partner in a multi-member LLC or partnership, here's what you need to know about the PPP, and what you'll need to apply.
Yes! The only stipulation is that your business was operational as of February 15, 2020. If you started your business after that date, you will not be eligible for this program.
If you're an owner in a partnership and do not give yourself a salary through a payroll service, you are likely still eligible for the Paycheck Protection Program, as your salary is reported on your Schedule K-1.
Just like any other entity type, you will need to spend at least 60% of the funds on payroll costs (maintaining your payroll expenses and headcount for eight weeks), and the remaining 40% on utilities, rent, and mortgage interest.
You will also need to maintain bookkeeping records to prove you spent the funds in the right way, in order to get the loan forgiven.
Further reading: PPP Loan Forgiveness (A Complete Guide)
The lender will want to see all documents related to any wage, commission, income, or net earnings that you or your employees have received. This means that you'll need to collect any earnings reports, pay stubs, or invoices you have.
Partnerships should be ready to provide:
Remember, member draws and 1099 contractor costs are not included.
Further reading: How to Calculate Your PPP Loan Amount
The Paycheck Protection Program funding can cover your office lease, rent, or mortgage interest, provided that you had it before February 15 2020. If you have a home office, you may be able to claim a portion of the expenses.
However, if you want to have your loan fully forgiven, you'll need to spend at least 60% of the PPP loan on eligible payroll expenses.
Further reading: PPP Loan Forgiveness: The Complete Guide
You can apply for the Paycheck Protection Program through an SBA-backed lender. We recommend applying through your own financial institution to start—a lender you already have an existing banking relationship with.
You should submit a single application on behalf of your partnership entity, not separate applications as individuals.
Further reading: PPP Lenders—Where to Get a PPP Loan
Yes! There is no harm in applying through more than one lender. Whoever processes your application first will receive an SBA approval number for your business (if you qualify for the loan). This number is called a PLP. The SBA will only issue one PLP for each Tax ID, meaning there is no chance you will accidentally get approved for two PPP loans.
If you are approved for a PPP loan, your application with the other lenders will eventually be rejected, so it's best to withdraw your application from the other lenders once you've been approved.
So far, there has been no guidance issued by the Treasury or SBA stating that you can only apply through one lender at a time. In fact, lenders are encouraging businesses to apply through multiple lenders, to increase their chances of getting processed in time.
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