6 PPP loan tips for minority entrepreneurs


The Small Business Administration seeks to improve the playing field for underserved entrepreneurs who were largely excluded in the company’s early days Paycheck Protection Program‘s previous rounds.

The program reopened on Jan. 11 and for two days only accepts applications for first-time PPP loans from community financial institutions, typically serving minority, woman and veteran owned companies. On January 13, the program will be open to borrowers who apply for PPP loans through Community financial institutions for the second drawing. Applications from other financial institutions won’t be accepted until later in the week.

Still, borrowers need to move quickly – funds ran out in less than two weeks when the program opened last year – and need to be able to demonstrate that they qualify for a PPP loan. These tips will help you:

1. Contact your lender – now

Contact your lender right away and let them know that you intend to apply, be it for a first PPP loan or a second draw loan. They can let you know if they’re attending and point you out to the forms and documentation you need.

“The best advice I can give to people is to act quickly,” said Mrinalini Jayashankar, attorney and owner of MJ law firm in Tennessee. “I’ve already contacted the lender I worked with on round one and let them know that I intend to apply for round two.”

2. Use a community financial institution

Find a local community bank for your PPP loan, especially if your lender does not participate or you usually work with a large national bank.

Borrowers who apply through municipal financial institutions will receive their first dibs this time with PPP funds. This includes applications from Financial institutions for community development, Minority depositaries, certified development companies and microcredit intermediaries.

You can Use this tool from the Opportunity Finance Network to find a community development financial institution near you.

3. Build your case

To qualify for one second PPP loanYou need to prove that your company has lost 25% of its gross annual revenue or in a quarter of 2020 compared to the same quarter of 2019. Lenders won’t just take your word for it. You’ll need to provide documentation to secure them (unless you’re looking for a loan for less than $ 150,000). Gather quarterly financial statements, bank statements and all relevant tax forms to show you are qualified.

For first and second loans, you must provide evidence of your total wage and salary costs, including all insurance and retirement benefits paid by your employer, for either the calendar year 2019, 2020 or the 12 months prior to the loan. Run the numbers for each scenario. You don’t want to leave money on the table by under-calculating your payroll.

4. Use your company network

Tap your banker, your lawyer, your payroll company, your accountant – anyone who knows you and your company. These links can help you prepare your loan application, gather the required documents, and resolve any issues that may arise.

5. Ask for help

Don’t hesitate to ask for help if you run into roadblocks. Find one Small business development center in your area or contact an organization like SCORE, a nonprofit that services entrepreneurs. Many organizations offer free online training for business owners.

“[With] There are no limits to webinars and seminars, ”said Janie Barrera, CEO of LiftFund, a community development financial institution. That means business owners can get help virtually anywhere. “The rules are the same whether you’re in Texas or Washington state. There, look for webinars to walk you through the application. “

6. Apply to multiple lenders

You can and should submit more than one PPP loan application. That way, when you learn that a lender only works with existing clients, for example, you don’t start from scratch. In addition to contacting local banks in your area, you should apply to all institutions that accept new customers. Just make sure to withdraw any pending applications once you have been approved for a PPP loan.

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Kelsey Sheehy writes for NerdWallet. Email: [email protected]


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