**Paycheck Protection Program (PPP) Loans: Eligibility for New Businesses**
## Introduction
The Paycheck Protection Program (PPP) was established by the Small Business Administration (SBA) as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act to provide financial assistance to small businesses and non-profit organizations during the COVID-19 pandemic. One of the key questions for new businesses is whether they are eligible for PPP loans.
## Eligibility Requirements for New Businesses
**To be eligible for a PPP loan, a new business must meet the following requirements:**
* Be a small business with fewer than 500 employees.
* Have been in operation on February 15, 2020.
* Have been affected by the COVID-19 pandemic, such as a reduction in revenue or an increase in operating costs.
* Use the loan proceeds to cover payroll costs, rent, utilities, and other eligible expenses.
**New businesses that were established after February 15, 2020, may also be eligible for PPP loans if they meet the following additional requirements:**
* Have been in operation for at least 2 months.
* Have at least one employee.
* Can demonstrate that they have been unable to obtain financing from other sources.
## Differences Between PPP Loans for New and Established Businesses
**There are a few key differences between PPP loans for new and established businesses:**
* **Maximum Loan Amount:** The maximum loan amount for new businesses is smaller than the maximum loan amount for established businesses. The maximum loan amount for new businesses is calculated based on two months of average payroll costs, while the maximum loan amount for established businesses is calculated based on three months of average payroll costs.
* **Forgiveness Requirements:** The forgiveness requirements for PPP loans for new businesses are more stringent than the forgiveness requirements for PPP loans for established businesses. For new businesses, 100% of the loan amount may be forgiven if the business uses the loan proceeds to cover payroll costs, rent, utilities, and other eligible expenses. However, for established businesses, only 75% of the loan amount may be forgiven.
## How to Apply for a PPP Loan as a New Business
**New businesses can apply for PPP loans through the SBA’s online portal.** The application process is similar to the process for established businesses. However, new businesses will need to provide additional documentation to demonstrate their eligibility, such as:
* Proof of business formation, such as articles of incorporation or a business license.
* Payroll records for the two months prior to applying for the loan.
* A statement from the business owner certifying that the business has been unable to obtain financing from other sources.
## Conclusion
New businesses may be eligible for PPP loans if they meet certain requirements. The maximum loan amount and forgiveness requirements are different for new businesses than for established businesses. However, the application process is similar. New businesses that are interested in applying for a PPP loan should visit the SBA’s website for more information.
**Additional Resources:**
* [PPP Loan Forgiveness Calculator](https://www.sba.gov/funding-programs/loans/coronavirus-relief-options/paycheck-protection-program/ppp-loan-forgiveness-calculator)
* [PPP Loan Application Form](https://www.sba.gov/funding-programs/loans/coronavirus-relief-options/paycheck-protection-program/ppp-loan-application-form)
* [SBA Paycheck Protection Program Website](https://www.sba.gov/funding-programs/loans/coronavirus-relief-options/paycheck-protection-program)