A new interim rule was issued by the SBA on March 3, 2021, allowing self-employed individuals who file Form 1040, Schedule C more opportunity to apply for PPP loans. The PPP loan program is currently open for applications through March 31, 2021, which is subject to extension.
The interim rule allows Schedule C filers to apply for and maximize their loan amount using gross income or net profit for either 2019 or 2020. Previously, Schedule C filers were excluded from eligibility to apply if they had net losses.
The calculation for the eligible loan value varies depending on if the borrower has employees or not and is based off either calendar year 2019 or 2020. The loan value is still subject to the maximum $100,000 cap for owner’s compensation, and proceeds must be used for eligible expenses.
Another modification for Schedule C filers reporting more than $150,000 gross income is the elimination of the loan necessity safe harbor. The SBA will review a sample of first draw PPP loans over $150,000 made to Schedule C filers. The review will assess compliance with the PPP eligibility criteria and the good faith loan necessity certification.
Related to the interim rule changes, the following forms were issued or updated from previous versions:
- First-draw borrower Form 2483
- Second-draw borrower Form 2483-SD
- Schedule C First-draw borrower Form 2483-C
- Schedule C Second-draw borrower Form 2483-SD-C
If we can assist you with completing a forgiveness application, in explaining the new programs’ provisions, analyzing the potential benefits or assisting you with gathering the needed information to apply, please call any Sponsel CPA Group Team member or our colleagues listed below.
This communication is intended to provide general information on legislative COVID-19 relief measures as of the date of this communication and may reference information from reputable sources. Although our firm has made every reasonable effort to ensure that the information provided is accurate, we make no warranties, expressed or implied, on the information provided. As legislative efforts are still ongoing, we expect that there may be additional guidance and clarification from regulators that may modify some of the provisions in this communication. Some of those modifications may be significant. As such, be aware that this is not a comprehensive analysis of the subject matter covered and is not intended to provide specific recommendations to you or your business with respect to the matters addressed.