Worried about the Paycheck Protection Program? Don't be.

Leery about the PPP loans everyone is talking about these days? Wary that it’s just another debt trap? Concerned that everyone is telling you to hurry and apply first and ask questions later? It’s OK if you are: the best small business owners I know usually approach things with a bit of healthy skepticism as well.

Let’s start with the (hopefully) obvious: The PPP isn’t some insidious plan by the deep state to deceitfully put everyone into deeper debt. It just isn’t.

Rather, it’s a bi-partisan effort at the behest of the smartest economists in the world, to compensate “main street” for the fallout from the stay-at-home order necessary to reduce the spread of COVID-19. What some are calling a Main Street Bailout is $349 billion of rescue money for small businesses so they can protect the paychecks of the 100 million or more employees of small businesses across the country. Hence the name: Paycheck Protection Program.

Even though it’s a ‘loan’ in the technical sense, any loaned funds with up to 100% forgiveness under reasonable criteria is better described as a conditional grant. Because that’s really what it is. Government just wants to make sure they’re giving the right amount to the right businesses/individuals who are using it for the right reasons.

Aren’t SBA loans hard to get though?

Yes, usually. But the PPP is like no other SBA loan you’ve ever heard of. ALL small businesses with fewer than 500 employees are eligible. There’s no sales or profit requirement. You can even be unprofitable. And not just all small businesses: all sole proprietors, self-employed, independent contractors as well — even if you only work part time. Incorporation (C corp, S corp, LLC, etc) is not required. Businesses apply with their EIN; non-incorporated businesses and contractors apply with their SSN. No collateral required. No business bank accounts are needed. Business credit isn’t required. There’s no personal credit check either. And no personal guarantee.

As long as you’re a legal resident operating a legal business that files proper payroll and tax reports and you haven’t defaulted on a SBA loan in the last seven years or felonies in the last five years, you/your business qualifies and will be approved.

But the 100% forgiveness thing seems preposterous. How does that part work? How much will really be forgiven? What are the terms, exactly?

Here’s the simplest way I know to explain it:

PPP funds are up to 100% forgivable. “Paycheck Protection,” or payroll costs, are forgivable and at least 75% of the funds must be used for this purpose. Amounts used to pay your business lease (or interest on mortgage payment) and utility payments are also forgivable but only up to 25% of the total loan amount. When you incur those costs, you turn them in to your SBA lender who confirms the amounts forgiven to you in writing within 60 days of receipt. Because payments are deferred for the first six months, there’s ample time for you to turn in your receipts and obtain forgiveness before the first payment is due.

Now, if you already know that some of your PPP loan funds won’t be forgiven (no fixed business location with lease/mortgage payments, for example) then just ask to receive only the amount you figure will be forgivable, instead of the entire amount. Alternatively, you could just take the entire max amount and then pay back immediately the portion you don’t anticipate to be forgiven. (Similar to using a credit card, then paying it back within the grace period.. no interest is due.)

Still. It just seems too good to be true.

I get it. Your Momma and my Momma both warned us to be wary of things like that. But these are desperate, unprecedented times. And I’ll bet your Momma also told you something about what desperate times call for… desperate measures.

The Paycheck Protection Program is a desperate, unprecedented opportunity. You should take advantage of it. For your sake, for the sake of your employees, contractors, and customers — and for the sake of healing our overall economy.

Since the Paycheck Protection Program was announced as part of the CARES Act, I’ve felt a calling of sorts to help close the gap between the money our government is trying to give, and the small businesses they’re trying to give it to. They’re trying to help. They’re trying to give out $349 billion in free money. As I mentioned earlier, they just want to make sure they’re distributing the right amounts to the right businesses and individuals who are using it for the right reasons. As small businesses and entrepreneurs, we just need to raise their hands (via a pretty basic application) so that some of that money should be going to us.

To that end, I’ve created the Paycheck Protection Program Resource Group for Small Biz & Self-Employed on Facebook to help get the word out, allay concerns, address questions, and so everyone can learn from the SBA lender and application experiences of one another. I created the group to help all eligible businesses and individuals receive the free money the government is trying to give us. I invite you to join, learn, contribute and share with others as this is a time to share and pull together.

The more eligible people who receive Paycheck Protection Program funds, the more quickly our economy will recover.

I’m not suggesting you should apply rashly, get the money, and ask questions later. Just take the next step and begin an application. Just one step at a time. See what documentation is asked for. See whether your SBA lender shares info up front about terms of forgiveness. Some are doing that. I expect more will in coming days and weeks. At the final steps where you’re asked to sign the final agreement and provide account info to receive the funds, you can still decide up to that point whether you wish to move forward.

(But I think you should.)