the sba payment

protection Loan

LLC, S Corp, C Corp, Other Business Entities

Sole Proprietors, Self-Employed, Single Member LLCs & Independent Contractors

Who Can Apply?


Under the PPP, small businesses are defined as places employing fewer than 500 employees per physical location.  Simplicity has partnered up with local lenders and asked them to spell out exactly what is the Payment Protection Act (PPA or PPP).  The first thing that cought our attention it "Although the federal government is the source of the funds, the money will be dispersed in large part through local lenders, as per the SBA’s usual model".

The 500 number is determined by a straight head count—the total number of full and part-time employees, not full-time equivalents (FTEs)

Your employees and revenues must have been negatively impacted by COVID-19 pandemic. The actual standard states that the loan is necessary because of “current economic uncertainty.”

For the PPP, the SBA is waiving its usual requirement that applicants prove they have thought financing elsewhere. The assumption is that those resources are not available within a feasible timeframe, if at all.

How Much Can I Borrow?

Qualified businesses are eligible for 2.5 times their normal monthly payroll costs, as determined by what they paid before Feb. 15, with two important qualifications. The total loan amount is capped at $10 million, and per-employee pay exceeding $100,000 is excluded from the calculation. Pay for employees residing outside of the United States is excluded.

1099 contractors pay can be included in the calculation. Operators in states with a tip credit can apparently use staffers’ total wage, and not just the amount paid directly by the employer, though the language of the Act is imprecise on that point.

The compensation of employees who were laid off but rehired can be factored into the loan amount provided they’re brought back by June 30.  That provision is intended to entice employers to rehire quickly as the crisis wanes.  Payroll documents will need to be submitted with applications.

How Will I Be Evaluated?


The PPP was conceived as a way of keeping employees on the payroll of business that can’t draw the needed funds from their revenues. Toward that end, the loans are intended for businesses that were viable prior to Feb. 15.

However, a number of no-go’s for loans have been suspended. Lenders will not be looking at collateral to back the loans, nor an inability of the applicant to secure credit elsewhere. And personal guarantees of the loans are not required of proprietors.

What Can I Use the Funds For?

The main aim of the PPP is to keep employees on the payroll for the eight weeks following the grant of a loan.  But in addition to maintaining pay, restaurateurs can use the funds to pay their mortgage, rent or utility charges.

What Are My Fees?

Borrowers will not be charged an upfront fee.

Because of relief considerations, the PPP assumes that mst borrowers can have their loans forgiven (see below). For loans or the portions of borrowed amounts that are not forgiven, all borrowers will be charged an interest rate of 0.5%. No payments are due for six months. Interest will be charged after that timeframe.

How Can I Get My Loan Forgiven?

If restaurants use the money as directed, much of the loaned amount will be “forgiven”—lawyer-speak for waived. At least 75% of the amount must have been used to pay employees for the eight weeks following the provision of a loan.

Forgiveness also extends to payments during that period for rent; interest on mortgages; utilities; necessary transportation; and telephone and internet services.

If employees are furloughed or fired during the eight-week period, the forgiveness amount is reduced in accordance with a formula set by the SBA.

The SBA 7(a) Loan

An SBA loan is a business loan that is guaranteed by the U.S. Small Business Administration (SBA). An SBA loan is the Holy Grail when it comes to small business expansion. Small business owners can use these funds in a multitude of ways with the aim of business growth through the SBA 7(a) or wealth creation through the SBA 504 loan program.  

The SBA essentially guarantees a portion of a loan that is acquired through an SBA approved lender. There are two main SBA funding programs which we focus on. SBA 7(a) and SBA 504.

SBA loans typically can range from around $200,000 up to $22,000,000. The term of the loans can also range from 5 years to 25 years depending on the use of proceeds. The interest rates on SBA loans can be anywhere from mid 3% range to the low 8% range, depending on numerous factors. 

Why choose an SBA Loan? 

There are a plethora of reasons for taking out an SBA loan for your business. Simply stated, an SBA loan has affordable interest rates, requires a smaller down payment, has favorable repayment terms, and can be used for a myriad of purposes. However, to enjoy the benefits of an SBA loan, you need to know who qualifies for an SBA loan and the differences between each program. 

Another reason to choose an SBA loan is that you can often be denied an SBA loan from a bank only to receive approval on the same loan from a nonbank direct lender. Banks are risk averse and slow which doesn’t fit well with most entrepreneurs who value speed. As a nonbank direct lender, Fountainhead makes a lending decision quickly based on diving into and understanding your unique business situation. You’re not a number or credit score to us. You’re a person, a business owner with a story that we listen to in order to find the best SBA option for you. 

Also, it’s easy to use technology to apply for an SBA loan. Each lender will have its own terms for the SBA loan program, but through an online platform like Fountainhead’s Pronto AI, you can upload all your documentation and receive a loan decision FAST. Two hours and we can get back to you. Why waste days, weeks, even months waiting to see if a bank will approve your loan when we can give you a decision the same day? We spare you the hassle and rejection you would face having to go from bank to bank and make the entire SBA process quick and easy. 


Applying for a SBA Loan 

Though you may not be applying for a traditional bank loan, if the institution offering the loan is a bank, you can expect the speed, service and bureaucracy associated with an ordinary bank. The only difference is that SBA loans are moderately easier to qualify for than traditional loans. 

Qualifying for an SBA loan doesn’t have to be an elaborate and time–consuming process if you choose the right lender. The application process for an SBA loan can seem daunting, but again if you choose the right lender, they will be able to seamlessly walk you through the process.

One of the main determining factors, as with most financing, will be your credit score. Most business owners who qualify have an annual revenue stream of over $350,000 per year, have a credit score of 650, and have been in operation for over three years, but there are many exceptions to these.

You’ll need to fill out and submit the required documentation including financial statements, description of the collateral, a business description and an outline of how you plan to spend the loan among other documents. 

The lender offering the loan will want to see a business with a solid credit history, a sound business plan, a business that has been profitable for its recent existence and an ability to repay the loan. 


Choosing the right SBA Loan 

There are a variety of loan funding programs offered by the SBA but the two most popular programs by far are: 

  • The SBA 7(a) Loan Program (general financing needs) 

  • The SBA 504 Loan Program (owner occupied commercial real estate and/or heavy equipment) 

The SBA loan you qualify for will depend on several factors, mainly about the use of proceeds. 


SBA Loans: The Basics 

The Small Business Administration (SBA) is a government agency that was founded in 1953 to offer business support to small business owners across the United States of America. One of the forms of support the SBA offers is financing, in the form of loans. The SBA also helps small scale entrepreneurs improve their business processes, learn how to take advantages of opportunities when they present themselves and how to get access to other forms of financing. 

An SBA loan is a small business loan characterized by long repayment periods, low down payments, and low interest rates while being guaranteed by the government. It is crucial to know that the agency itself does not provide the loans directly. The loans are offered by lenders and the SBA guarantees the loan, effectively promising to pay back the lender a portion of the loan if the borrower defaults. The guarantee is a risk reduction tool for lenders which enables them to offer more loans to more small businesses on better terms. Increasing the incentive to lend by financial institutions is the motive behind the creation of SBA loans.  

SBA 7(a) Loan Program 

The 7(a) program is the most popular among the SBA loan programs. This is because the loan is pretty flexible and can cover most general financing needs. Needs like working capital, relinquishing old debt obligations and renovating the business premises are the main reasons for applying for a SBA 7(a) loan. 

SBA 7(a) loan terms include: 

  • A maximum loan amount of $5 million. 

  • Repayment periods of up to 10 years for working capital loans or up to 25 years for commercial real estate loans. 

  • To be used for general financing needs