Who Is Not Eligible For a PPP Loan?
Obtaining a PPP loan can be a challenging process, and you should be sure you know who is not eligible for one. The SBA and Treasury have issued extensive guidance on who is not eligible for a PPP loan, and it's important to review the information carefully. This article will summarize some of the pertinent law and rules. As always, you should consult an attorney before making any decisions regarding your financing needs.
Before applying for a PPP loan, it is important to understand all of the eligibility requirements. The SBA and Treasury have published extensive guidance on the guidelines, and this resource doesn't contain all of the information you may need. If you have questions, contact Schwabe, Williamson & Wyatt. We'll make sure you meet all of the requirements. We'll help you find out what the requirements are for your specific business.
If your company's net profit or gross income is below the threshold for a PPP loan, it may not qualify for one. The IRS Form 1040 Schedule C requires businesses to use their net profit or gross income. This amount is subject to a cap of $100,000. Therefore, if you don't have any net profit or revenue, you probably aren't eligible for a PPP loan.
There are several exceptions to the general rule. Passive businesses aren't eligible, but they are usually subject to management agreements. Some of these are hedge funds and private equity firms, which may have additional guidelines. Some types of businesses can also be excluded from a PPP loan. Speculative businesses may be eligible for PPP loans, including hotels, marinas, and recreational vehicle parks.
Despite the ppp loan program's popularity, not all businesses are eligible for the program. Many small businesses don't make enough money to make the payments on time. In addition, some businesses may not be eligible for a PPP loan at all. For these, the IRS has strict requirements and requires the business to be operating for at least two years. In other words, a business must have at least one year in operation to qualify.
In general, a PPP loan is not available to companies that have negative net profits or gross income. A business that has a zero net profit or no gross income is not eligible for a PPP loan. However, some businesses may not qualify for a PPP loan, so it is important to read the fine print on the PPP. If you are an employee of a bank, you should consult with a legal professional before pursuing a PPP loan.