The PPP (Paycheck Protection Plan) has offered loans to help businesses make payroll and fund other related business costs. In each of the three COVID-19 stimulus relief packages, Congress approved millions of dollars in funding for the PPP. These loans are intended to help businesses struggling due to COVID-19 restrictions.
However, banking app Chime has started rejecting PPP loan deposits. According to a Reddit user, the response from the company was that it's for personal use only, not business transactions. Chime tweeted, “Any SBA or PPP loan will be rejected and sent back to the IRS.”
PPP loan forgiveness update explained
Loans received through the PPP are forgivable as long as certain conditions are met. Businesses must maintain employee and compensation levels, use the proceeds on eligible expenses, and use at least 60 percent of the loan for payroll.
The other 40 percent of the funds need to be allocated for rent, utilities, mortgage interest, or other approved expenses. Borrowers can apply for PPP loan forgiveness after funds received from the loan have all been used.
Why is my bank rejecting PPP loans?
Some PPP loans are being rejected by the SBA (Small Business Administration) due to a software glitch. The SBA created a new automated approvals system to simplify and streamline the application process. However, it has caused some legitimate applications to be rejected instantly.
Applicants should check the criteria for the second wave of PPP loans to be sure that their business qualifies for funds. If you think that you still qualify and a technical error might have caused your application to be rejected, you’ll need to reach out to your bank to resolve the situation.
How to do the PPP loan and get approved.
If you already applied for the First Draw PPP loan, you might still be eligible for the Second Draw. Loan funds must be used to cover payroll. Other qualified expenses include mortgage interest, rent, utilities, worker protection costs, uninsured property damage costs, and some supplier costs for operations.
Businesses or sole proprietors looking to apply for the Second Draw PPP Loan must have a demonstrated 25 percent reduction in gross receipts from comparable quarters in 2019 and 2020. The maximum loan amount is usually 2.5x the average monthly payroll for 2019 or 2020, up to $2 million.
The program officially runs through May 31, 2021, but eligible businesses are urged to complete their applications as soon as possible before the allocated funds run out.
Where to apply for the PPP loan
Many financial institutions are accepting PPP loan applications. The SBA website has resources listing lenders near you. Lender Match is an easy place to find the best place to apply and be matched with PPP lenders.
Womply and the PPP loan
Womply is one platform that business owners can use to apply online for PPP loans. The website says that the platform helped 100,000 small businesses receive PPP loan funds in 2020. Womply has already served 150,000 businesses and independent contractors in 2021.
Although Womply isn't a lender, the platform gives users access to over 25 different lenders.