In United State, government has initiated PPP Loan to help small businesses during economic crises, like the COVID-19 pandemic

Author - Coinfinancemoney ()Tushar Mistari

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In March 2020, It was created as part of the CARES Act, later extended and modified by subsequent legislation

The primary goal of the PPP loan is to provide financial support to small businesses to retain their employees and cover operational expenses

Loan is provided by lenders, including banks and credit unions, loan administered by the Small Business Administration (SBA)

PPP loans can be used for payroll costs, rent, utilities, mortgage interest, and certain other qualified expenses etc.

If at least 60% of the loan amounts is used in payroll expenses then PPP loan is forgivable for such businesses.

To qualify for the loan business should be operational before 15 Feb 2020, and have certain number of employees 500 or fewer than 500

Self-employed individuals, independent contractors, and sole proprietors are also eligible to apply for PPP loans.

The loan amount usually calculated based on business's average monthly payroll costs, multiplied by a factor (2.5 or 3.5)

PPP loan has maturity of 5 years and low fixed  interest rate, which is around 1%

Entire application process and rules associated with it are depends on lenders, during the loan application period

The PPP program has gone through multiple rounds of funding and changes, with updates made to address issues