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What Small Businesses Need to Know About the Newest PPP Loans

The Small Business Administration (SBA) and U.S. Treasury Department resumed the Paycheck Protection Program (PPP) for First Draw Loans on the week of January 11, 2021, and on January 13, 2021, Second Draw PPP loans returned with the same general terms. Small businesses can apply for First or Second Draw PPP loans from participating lenders now through March 31, 2021.

First Draw PPP Loan Details and Eligibility

PPP loans are designed to help eligible small businesses keep employees on the payroll and manage other essential expenses during the COVID economic crisis. The funds can be used for authorized benefit costs, worker protection expenses, utilities, mortgage and other covered expenditures.

What are the Qualifications for a First Draw PPP Loan?

Small businesses that meet the following criteria can apply for a first draw PPP loan: Businesses (including self-employed individuals, independent contractors, sole proprietors, nonprofits, tribal and veteran organizations) with 500 or fewer employees/affiliates

What Are Personal Loans?

A personal loan is a type of loan that offers funding for a wide range of financial needs. Lenders generally provide personal loans for almost any purpose — including debt consolidation, unexpected expenses, home improvement and more. However, some lenders may place restrictions on the types of expenses that can be covered.

How do personal loans work?

Personal loans often come in the form of installment loans, which are repaid over a period of time that is specified in the loan application process. When taking out a personal loan, a borrower will receive a lump sum payment in their bank account if they are approved for financing. Then, the borrower must pay back the loan amount at an additional cost over their repayment term, also known as the loan term. Automatic payments are commonly offered as a convenient payment method on many personal loans. This feature, often referred to as autopay, automatically deducts loan payments from the borrower’s bank account, making it easier to avoid missed payments and late fees.

How much time can I have to repay my personal loan?

Personal loans are repaid in regularly scheduled loan payments, also referred to as installments, which are spread out over the loan term. This repayment period can be as short as six months or as long as five years. You should expect to make monthly payments over the course of the loan, but you can often repay early with no prepayment penalties. There will usually be a due date by which a personal loan must be paid off, making them different from open-ended credit options like a line of credit. Failure to repay by this due date could result in late fees, although some lenders offer grace periods of 10 to 15 days. If available, signing up for automatic payments, or autopay, can help you avoid late fees.

Everything You Should Know About Installment Loans

If you’re at all familiar with loan products, you know that there are often different names for the same type of product. For example, “payday loans” might be considered a “short-term loan,” a “personal loan,” a “term loan,” or to many — just a “loan”. The same is true for installment loans. An installment loan may also be referred to as a “personal loan,” a “term loan,” and in rare cases — even a “short-term loan.”

What is an installment loan?

An installment loan is a loan that provides the borrower with a lump sum of money up front, which is to be repaid in installments over the course of an established term. That is why an installment loan may also be called a term loan. If the term is a short period of time (typically just a few months), it could even be considered a short-term loan. However, most installment loans are for larger amounts and are repaid over several months or years. Typically, the larger the amount of the loan, the longer the term to repay.

How is an installment loan repaid?

Installment loans are commonly repaid in monthly payments. Payments are generally a fixed amount every month, and go toward a portion of the principal borrowed plus interest on the loan. Most installment loans will let you pay more than the amount due each month, with the extra repayment amount going toward the principal.