PPP Loan – Does my Business Qualify?

The Paycheck Protection Program (PPP) loan is loan intended to help small businesses keep their works on payroll.

Your business should be able to qualify for the PPP loan. Generally, you will qualify for the PPP loan if your business is:

  • based in the U.S
  • has 500 employees or less
  • your business has been affected by the COVID-19 pandemic


There are some general disqualifiers that will make your business invalid for the PPP loan. If one of these statements are true for your business, you may not be qualified:

  • You were not in operation on or before February 15, 2020.
  • You employ household employees such as housekeepers or nannies
  • An owner of 20% or more is involved in the justice system
  • An owner of 20% or more has been convicted of a felony within the last five years
  • You or your business are delinquent or has defaulted on a loan from the SBA or any other Federal agency within the last seven years
  • You or your business is bankrupt or is currently in bankruptcy proceedings
  • You are an officer or key employee of the lender you are applying with, or a close relative of one.
  • Your business is a hedge fund or private equity firm
  • You do business in an industry that is not eligible for SBA 7(a) loans, such as loan packaging  or gambling.


PPP Loan application

Sole proprietorships, Contractors and Single-Member LLCs

If you are a sole proprietor or a single-member LLC – you’ll need a tax-ready 2019 Schedule C from your personal taxes. It does not need to be filed in order for you to apply, however, it must be filled completely & accurate. 

You also must have reported a net profit on your 2019 Schedule C. If you also have employees on payroll, you do not need a net profit, but you must have payroll tax forms 940 and 941/944 for 2019.


If you are in a partnership, be sure not to submit two applications. Submit only one PPP application on behalf of your partnership.

If you have employees, please ensure you have payroll tax forms 940 and 941/944 for 2019.

S Corps & C Corps

If your business is an S Corp or a C Corp, you are only eligible for a PPP loan if you have employees on payroll. If you are only paid through owner’s draw or distributions and not through payroll, you did not pay payroll taxes so you may not be eligible for the PPP loan.

You’ll need to have payroll tax forms 940 and 941/944 for 2019 on hand.


If you run a non-profit – you are eligible if you ran payroll in 2019.

How to Apply for the Paycheck Protection Program (PPP) Loan

So you’ve decided that you qualify and you want to apply for the PPP Loan? Great news – some help is on your way! To apply for the PPP Loan, you’ll need to apply through a lender that is participating in the PPP loan program. 

You can find a list of lenders who are participating in the PPP loan program hereNarwhal recommends applying through your local bank or credit union. It also does not apply to submit multiple applications with different lenders. Once approved, the SBA will automatically reject your 2nd application.

Bookkeeping Can Help You in Your Application & Loan Forgiveness

If all you need is your payroll forms for your PPP loan application, you won’t need any extra bookkeeping. However, once you get the money from the loan, you should absolutely start tracking your spending from your loan. In order to qualify for the PPP loan forgiveness, the SBA will need to ensure you are spending it accurately. They’ll need to verify your books to ensure proper spending in order to forgive your PPP loan.

If you’re self employed and haven’t yet filed taxes, you will most likely need to get your books caught up so you can produce a 2019 income statement which will show your net profit. Once you get approved, we recommend keeping your books current. This is your best bet to get your PPP loan approved for loan forgiveness!

Don’t even want to think about doing your own bookkeeping during this stressful environment? Rather focus on running your business and possibly hire a bookkeeper? Be sure to check out Narwhal! We are a bookkeeping & data insights business and we’ll handle your books for a low flat monthly rate.

We’ll close a month of your books for absolutely free with your free trial now!


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