Paycheck Protection Program

Small firms can use the Paycheck Protection Program to keep their payrolls up to date, rehire employees who have been laid off, and cover eligible overhead costs. Let’s see what the Paycheck Protection Program is all about, its benefits, and a lot more.


What Is a Paycheck Protection Program?

CARES creates a loan program called Paycheck Protection, which is part of the Coronavirus Aid, Relief, and Economic Security Act. This was originally a $350-billion initiative aimed at providing eight weeks of cash flow support to American small businesses with 100% federally guaranteed loans. The SBA backs the loans.

The Paycheck Protection Program and Health Care Enhancement Act, signed into law in late April, increased the program’s budget by $310 billion. The Paycheck Protection Program Flexibility Act made significant improvements to the program, allowing more time to spend cash and making it easier to have a loan forgiven completely.

The following is a high-level description of the PPP loan program:

  • Small enterprises of all sizes are eligible.
  • The loan matures in two years, and the interest rate is one percent.
  • A loan taken after June 5, 2020, will have a five-year term.
  • Upon disbursement of the loan, the loan covers expenses for 24 weeks.
  • There is no need to make loan payments until either your forgiveness application is finalized or your 24-week covered period finishes, which is 10 months.
  • It is not necessary to provide collateral or a personal guarantee.
  • There are no charges.
  • The debt can be forgiven, effectively converting it into a non-taxable gift.

How does a Paycheck Protection Program Work?

Small businesses can get loans through the Paycheck Protection Program (PPP) that can be forgiven tax-free. There has been a lot of interest in these loans, but there has also been a lot of misunderstanding about how to receive them. The following steps will help you know about the working of PPP

  • Loan submission
  • Loan processing
  • Loan closing
  • Funding 

What are the key factors for a Paycheck Protection Program?

Within the scope of this alert, it is impossible to present a full list of issues that may invalidate a company’s need, but some significant items to discuss with management or your board of directors include:

  • Your ability to access liquidity quickly
  • Your revenue and EBITDA projections
  • Your location
  • Your balance sheet
  • Your tolerance for public scrutiny
  • Your opinion about the materiality of the loan amount
  • Your employee acquisition cost and lead time

Pros and Cons of a Paycheck Protection Program


  • If you play your cards well, your PPP loans can be forgiven completely.
  • There is no need for collateral or a personal guarantee with PPP loans.
  • The PPP interest rate is ridiculously low.
  • Small businesses benefit from the Paycheck Protection Program, and monies are still available.
  • PPP money can be used for any reasonable business expense.


  • Applying for a PPP loan is difficult.
  • You must request PPP loan forgiveness, and if you don’t spend it wisely or keep good records, you must repay the loan.
  • You have only two years to repay the PPP loan completely (UPDATE: NOW 5 YEARS)
  • You can only borrow up to 2.5 times your average monthly salary (FOR 2021, SOME CAN QUALIFY FOR 3.5X)
  • You will almost certainly be audited if you borrow more than $2 million.

How is the Paycheck Protection Program different from USDA Loan?

The Paycheck Protection Program was established by the US Federal Government in response to the Coronavirus (COVID-19) outbreak (PPP). Agricultural producers could use this program’s forgiveness on some Texas USDA loans to retain people on the payroll and offset some of their operational costs.

Please contact the Texas Mortgage Pros today to help you get the best rates and the best service.

The Texas Mortgage Pros

118 Vintage Park Blvd W443, Houston, TX 77070, United States

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