Upside Financial’s PPP Loan FAQ

Updated 6.23.2020

PPP Loan Qualifications

What are the specific requirements to qualify for a PPP Loan?

Any small business with 500 or fewer employees may be eligible. This includes small businesses, sole proprietors, S corporations, C corporations, LLCs, independent contractors, self-employed people and 501(c)3 and 501(c)19 nonprofits. For specific questions about requirements, please visit the SBA's PPP website.

Do I qualify for a PPP Loan if our company is VC or private-equity backed?

These firms typically invest in many businesses at a time, defining startups as affiliated with their investors has the potential to push them beyond the 500-employee limit. The requirements do not include just your usual common control definition (i.e. over 50% of equity or 50% of board seats) but also negative controls (veto powers) over operational matters or quorum requirements. The rules are very fact specific, you should consult counsel or your investors to determine if you are ineligible.

UPDATE: Do I qualify for a PPP Loan if our company has already laid off employees?

Yes, you still qualify for a PPP loan, but the SBA will use a sliding scale to reduce the amount eligible for forgiveness depending on how many employees are retained. If businesses ensure their employee count is comparable to their employee count before they applied by December 31, they won’t be penalized. Remember that at least 60% of the loan proceeds must be used for eligible payroll costs incurred by December 31, 2020.

UPDATE: Do I qualify for a PPP Loan if our company has already furloughed employees?

Yes, you still qualify for a PPP loan, but the SBA will use a sliding scale to reduce the amount eligible for forgiveness depending on how many employees are retained. You need to (i) use the loan to pay payroll and (ii) rehire before December 31 to qualify for forgiveness.

Do I qualify for a PPP Loan if our company reduces employee pay?

Yes, you still qualify for a PPP loan, but forgiveness will be reduced if full-time headcount declines, or if salaries and wages decrease.

Do I qualify for a PPP Loan if I work for myself and am my only employee?

Yes. Sole proprietors, independent contractors, gig economy workers, and self-employed individuals are all eligible for the Paycheck Protection Program.

Do independent contractor expenses qualify for a PPP Loan?

No, independent contractors have the ability to apply for a PPP loan on their own so they do not count for purposes of a borrower’s PPP loan calculation.

Do I qualify for a PPP Loan if I already applied for the loan in the last 30 days?

Only one PPP loan can be obtained per borrower. If you somehow receive funding from multiple lenders, you'll need to return money to one of those funding sources to avoid penalty.

Application Process

What documents should I include with my application for a PPP Loan?

If your business structure is any of the following: Corporation, LLC, Partnership, Professional Corporation, General Partnership, Nonprofit  

Businesses should have ready:
+ Color copy of government issued ID (front and back)
+ Signed Beneficial Ownership Form (for all applicable parties), must include government issued IDs for all parties listed
+ Formation Documents, as applicable (choose as applicable to your business type): Articles of Incorporation, Certificate of Existence, Certificate of Organization, Charter, Partnership Agreement, Operating Agreement, Non-Profit Bylaws, 501(3)(c) Evidence, Trust Agreement, Certificate of Trust, Estate Agreement, or Certificate of Formation
+ If you have received or been approved for an EIDL loan: Your most recent statement from your outstanding Economic Injury Disaster Loan
+ 2019 IRS Forms 941 for 4 quarters of 2019 or 2019 IRS Form 944 (if applicable)
+ 2019 IRS Form 940
+ 2019 Schedules K-1 for each Partner (if your business is an LLC or partnership)
+ 2019 annual payroll statement by employee that will provide the following information (where possible, preferably from payroll provider or payroll system):
Salary, wages, commissions, or tips (not exceeding $100,000 annually for each employee)
Costs for vacation, parental, family, medical or sick leave
Costs for separation or dismissal of employees
State & local taxes assessed on employee compensation

+ Health insurance premiums for employees paid by the business owner under a group health plan (if applicable)
+ Retirement plan funding for employees paid for by business owner (if applicable)


If your business structure is any of the following: Independent Contractor, Sole Proprietor, Self Employed, Single Member LLC

With Employees:
+ Color copy of government issued ID (front and back)
+ If you have received or been approved for an EIDL loan: Your most recent statement from your outstanding Economic Injury Disaster Loan.
+ 2019 1040 Schedule C
+ 2019 IRS Form W-3
+ 2019 IRS Form 940
+ Payroll document for period including February 15, 2020 - demonstrate the business was in operation
+ 2019 annual payroll statement by employee that will provide the following information (where possible, preferably from payroll provider or payroll system):
Salary, wages, commissions, or tips (not exceeding $100,000 annually for each employee)
Costs for vacation, parental, family, medical or sick leave
Costs for separation or dismissal of employees
State & local taxes assessed on employee compensation

+ 2019 Forms 1099-MISC
+ Health insurance premiums for employees paid by the business owner under a group health plan (if applicable)
+ Retirement plan funding for employees paid for by business owner (if applicable)

Without Employees:
+ Color copy of government issued ID (front and back)
+ If you have received or been approved for an EIDL loan: Your most recent statement from your outstanding Economic Injury Disaster Loan.
+ 2019 1040 Schedule C
+ 2019 Forms 1099-MISC for Independent Contractors
+ Payroll document for period including February 15, 2020 - demonstrate the business was in operation

What is the deadline to submit my application for a PPP Loan?

June 30, 2020. Although the PPP closes on that date, the Initial PPP guidance encourages businesses to apply as quickly as possible due to concerns that high demand will cause the PPP to reach its initial funding cap of $349 billion prior to that date. The President has requested additional funding, but it has not yet been approved by Congress.

How do I apply for a PPP Loan?

You can apply through any existing SBA lender or through any federally insured depository institution, federally insured credit union, and Farm Credit System institution that is participating in the program. Other regulated lenders will be available to make these loans once they are approved and enrolled in the program. You should consult with your local lender as to whether they are participating. Visit www.sba.gov for a list of SBA lenders.

What are the costs to apply for a PPP Loan?

There is no cost to apply for the PPP Loan.

Is there a standard fee set by bankers for a PPP Loan application, or does it vary?

Per the CARES Act there is no fee—the government is reimbursing the banks.

Do I have to pay the costs to apply for a PPP Loan upfront?

Since the SBA is waiving all fees, there are no costs to pay up front.

How long until I hear back on a decision about my PPP Loan?

Given this is a new process and the banks are still working out the approval process with the SBA, many lending institutions are not providing timelines currently.

Will I need to pledge collateral or personally guarantee to qualify for the loan?

No, no collateral is required.

Receiving Payment

Is a PPP Loan paid on a first come, first served basis or are there unlimited funds for businesses?

PPP Loans will likely be distributed by lenders on a first come, first served basis.

When will I receive a PPP Loan payment?

Lenders are required to disburse funds within 10 calendar days following application approval.

How much money can I borrow?

You can borrow up to 2.5 times your average monthly payroll costs from last year. Our Payroll Calculator will help you accurately calculate this number when you complete your application with us. However, that amount is subject to a $10 million cap. If you recently started your business or run a seasonal business, then you will calculate this number using a different timeframe.

What can be counted in payroll?

For an entity/business:
1. Gross cash compensation counted in payroll costs will be capped at $100,000 annualized for each employee.
a. Salary, wages, bonuses, commission, and similar compensation
b. Cash tips
2. Vacation, parental, family, medical, and sick leave
3. Severance
4. Group health benefits, including insurance premiums
5. Retirement benefits
6. State and local taxes

What can be counted in payroll?

For an entity/business:
1. Gross cash compensation counted in payroll costs will be capped at $100,000 annualized for each employee.
a. Salary, wages, bonuses, commission, and similar compensation
b. Cash tips
2. Vacation, parental, family, medical, and sick leave
3. Severance
4. Group health benefits, including insurance premiums
5. Retirement benefits
6. State and local taxes

For sole proprietors and independent contractors:
1. Wages, commission, net earnings from self-employment income, or similar not to exceed $100k over 1 year
2. Please note that independent contractors must apply on their own and cannot be included in a business’s filing/application.

What is not included:
1. Any employee’s compensation in excess of $100,000 per year
2. Employer taxes
3. FICA
4. Compensation paid to an employee who resides outside of the US
5. Qualified sick leave wages for which a credit is allowed under the Families First Coronavirus Response Act
6. Qualified family leave wages for which a credit is allowed under the Families First Coronavirus Response Act

How do I calculate the loan amount?

A critical component of the Payroll Protection Program loan application is your company’s Average Monthly Payroll cost. This calculation will be used to determine the total value of your loan. The SBA released guidance here on how to calculate your loan amount.

Allocating the Loan

UPDATE: What can a PPP Loan be used for?

Loan proceeds should be used for payroll, benefits, taxes on compensation, mortgage interest, rent, and utilities. At least 60% of the total should be spent on payroll.

What happens if I use a PPP Loan for funds that do not qualify?

If you use PPP funds for any other valid business purposes, the SBA will direct you to repay those amounts. If you knowingly use the funds for non-business purposes, you will be subject to additional liability, such as charges for fraud.

Are there certain aspects of this loan that pertain only to nonprofit organizations?

No, there are no specifics that pertain only to nonprofit organizations.

Loan Forgiveness

UPDATE: How do I get loan forgiveness for a PPP Loan?

Borrowers will have their loans forgiven if they use the money for designated expenses. The amount of forgiveness is equal to the total amount of payments for payroll, mortgage interest, rent, and utilities. It is anticipated that no more than 40% of the forgiven amount may be for non-payroll costs.

UPDATE: A lot of guidance has said I can use 60% on payroll and up to 40% on rent, utilities...etc. Can I use 100% on the payroll?

The language used from the SBA says that you have to use at least 60% on payroll, meaning that you may use more than 60% on payroll and still be eligible for 100% forgiveness. Be cautious with payroll, though. No one employee can make more than $100,000 ($3,846.15 per 2-week pay period) and no one salary can be decreased any more than 25%. If you pay an employee more than $100,000 annualized (or more than $3,846.15 over a two week period), the difference between the two amounts will not be forgiven.

UPDATE: What can be forgiven?

Payments made in the 24 weeks after the loan is provided for:
1. Payroll
2. Rent for the office
3. Mortgage interest for the office
4. Utilities

Using the provided funds for rent, mortgage and utilities is capped at only 40% of the forgiveness amount.

If my loan is not forgiven, how much will I have to pay monthly?

Any portion of the loan that is not forgiven will carry an interest rate of 1.0% and is due to be paid back in two years.

How long do I have to repay a PPP Loan?

If you use PPP loans for funds that do not qualify, you will subsequently have two years to repay the PPP loan.

What is the interest rate on a PPP Loan?

The interest rate for a PPP loan is 1%.

Is there a payment deferral period for a PPP Loan?

You will not have to make any payments for six months following the date of disbursement of the loan. However, interest will continue to accrue on PPP loans during this six-month deferment. Payments for the first six months can be deferred. There is no prepayment penalty.

Is a PPP loan taxable?

Any amount of loan forgiven as part of the PPP is excluded from gross income, and, as such, is not taxable. The CARES Act and the SBA guidance is clear that payroll costs include state and local payroll taxes paid (e.g. state unemployment taxes), but does not include the employer-paid portion of federal payroll taxes known as FICA (e.g. social security and medicare payroll taxes).

PPP & Other Assistance Programs

Am I able to receive a PPP Loan and collect unemployment?

The CARES Act not only provides relief for small business owners through loans but also allows self-employed people, independent contractors, and part-time workers to collect unemployment benefits. You cannot receive both a PPP loan and unemployment assistance however.

What is the difference between a PPP Loan and an Economic Injury Disaster Loan?

The Economic Injury Disaster Loan Program (EIDL) can provide up to $2 million of financial assistance (actual loan amounts are based on amount of economic injury) to small businesses or private, non-profit organizations that suffer substantial economic injury as a result of the declared disaster, regardless of whether the applicant sustained physical damage.  

a. It can be used for a slightly wider amount of obligations than the PPP.
b. You can apply for both—but they can’t be used for the same obligations.

Can I receive a PPP Loan and use the Employee Retention Credit?

No, if you receive the Employee Retention Credit, you may not receive a PPP loan and no payroll tax deferral is permitted if you receive PPP loan forgiveness.