Who Is Not Eligible For A Ppp Loan

Small business owners who are looking for funding during the pandemic might consider applying for the Paycheck Protection Program (PPP) loan. The PPP loan is designed for small businesses, so it’s important to understand who is eligible for this type of funding and who is not.

Businesses and organizations that are deemed ineligible for PPP funding include those that are engaged in lobbying and political activities, non-profit organizations that are not tax exempt under Internal Revenue Code Section 501(c)(3) or 501(c)(19), entities that are not U.S. citizens (i.e., immigrants), businesses engaged in an illegal activity, businesses that have already received specific small business grants, hedge funds, passive businesses with few or no employees, and pyramid schemes.

Additionally, publically traded companies, entities that receive more than 10% of their revenue from passive income sources (i.e., investments), businesses that focus on gambling, religious entities and organizations (i.e., churches, temples, mosques, and religious schools) are also ineligible for PPP loans.

It’s also important to note that owners of businesses, including certain types of franchises, must have a personal credit score higher than 500 to be eligible for PPP funding. Currently, sole proprietors, independent contractors, freelancers, and certain small businesses with a business operating agreement are eligible for PPP loans.

The eligibility requirements vary from lender to lender but in general, if you don’t meet the requirements of the type of business outlined above, then you are likely ineligible for a PPP loan. Understanding who is and who is not eligible will help to ensure you don’t waste time on an application process that you don’t qualify for.