As a sole proprietor, 1099 contractor, single-member LLC, or a gig economy member, you may be eligible for a PPP loan. Speak with a lender and fill out an application to determine exact eligibility.
Loan details As with any loan, it’s important to understand the terms.
The PPP loan has a two-year maturity timeline with a 1% interest rate. The interest begins to accrue as soon as funds land in your account.
If your loan is forgiven (either fully or partially), so is the applicable interest.
For portions of the loan that are not forgiven, all payments are deferred for six months, during which time the interest accrues at a rate of 1%.
There is no prepayment penalty for paying off the loan early.
The PPP loan can be forgiven if you follow certain criteria as outlined below.
How much money can you receive?
As the name implies, the Paycheck Protection Program has the intention of helping protect your income. You can receive a loan amount that is based on your salary, up to $100k per annualized period. But, one important caveat is that 2019 earnings come into play as well.
When determining how much money you can receive, you have to include 2019 business earnings. If you only made $50,000 in 2019, you have to calculate an equivalent 8-week salary (based on 2019 earnings), and the loan amount can’t surpass that.