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Mar 4, 2021 by DianeN

BIG NEWS FOR SOLE PROPRIETORS!! PPP CHANGES YOU NEED TO KNOW!

DID YOU ATTEMPT TO APPLY FOR PPP ONLY TO FIND OUT YOUR LOAN/GRANT WAS REALLY SMALL?  NOT WORTH THE EFFORT?  THE RULES HAVE CHANGED THIS TIME AROUND.  PLEASE READ THIS!!

Many of you small business owners, sole-proprietors, gig performers, 1099 independent contractors filed for (and tried to file for) the PPP loan/grant this spring only to find out that you were not going to get much money or no money at all.  Many of us who advocated for you this past year—telling legislators how negatively you were affected by the pandemic and the lack of funding in the PPP, were listened to.  This second round of PPP has a new way for you to calculate your income and thus the amount of your PPP.

Under the old rule your income listed on line 31 of our Schedule C determined your loan amount.  This was your NET profit.  This amount was small for many of you who itemize.  The new rule (if you file a Form 1040) allows you to use your GROSS income to calculate your loan amount.  This is your income before any deductions which is line 7 on Schedule C.  Language is below.

The interim final rule also allows individuals who have felonies (non-financial fraud) in the last year or those delinquent or in default of their Federal student loans to apply.

“A Schedule C filer may elect to calculate the owner compensation share of its payroll costs—that is, the share of its payroll costs that represents compensation of the owner—based on either (i) net profit or (ii) gross income, as calculated under the rule below.  Gross income is the amount the borrower reports on line 7 of Schedule C. If a Schedule C filer has no employees, the borrower may elect simply to calculate its loan amount based on either net profit or gross income. If a Schedule C filer has employees, the borrower may elect to calculate the owner compensation share of its payroll costs based on either (i) net profit or (ii) gross income minus expenses reported on lines 14 (employee benefit programs), 19 (pension and profit-sharing plans), and 26 (wages (less employment credits)) of IRS Form 1040, Schedule C.  For a Schedule C filer without employees, owner compensation is the only component of the borrower’s payroll costs. For a Schedule C filer with employees, owner compensation is added to employee payroll costs to determine the borrower’s total payroll costs.
Expenses reported on lines 14, 19, and 26 of the IRS Form 1040, Schedule C represent employee payroll costs and are subtracted from the owner compensation share of payroll costs if the owner uses gross income to calculate its loan amount in order to avoid double-counting these costs.”

To view the new Interim Final Rule, click here.

To view the updated First Draw application, click here.

To view the updated Second Draw application, click here.

Click the links below for more information about the latest updates to the Paycheck Protection Program.

  • Frequently Asked Questions for Lenders and Borrowers (updated 03-03-21)
  • Paycheck Protection Program First Draw Borrower Application Form (updated 03-03-21)
  • Paycheck Protection Program First Draw Borrower Application Form for Schedule C Filers Using Gross Income (published 03-03-21)
  • Paycheck Protection Program Second Draw Borrower Application Form (updated 03-03-21)
  • Paycheck Protection Program Second Draw Borrower Application Form for Schedule Filers Using Gross Income (published 03-03-21)
  • Paycheck Protection Program Lender Application Form First Draw Loan Guaranty (updated 03-03-21)
  • Paycheck Protection Program Lender Application Form Second Draw Loan Guaranty (updated 03-03-21)

 

 

Filed Under: Chamber News, COVID-19, Grants & Funding Tagged With: ARTIST, CHANGES, COVID, ppp, SOLE PROPRIETOR

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Windham Region Chamber of Commerce
1320 Main St., Suite 27
Willimantic CT 06226
Phone: (860) 428-7739

info@windhamchamber.com

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