One of the most attractive features of the PPP loan is its generous loan. However, the updated rules for self-employed workers may limit the amount granted. The reason for the restriction is that most independent contractors, self-employed and sole proprietors have much less overhead and could use the entire loan as compensation, resulting in an unintentional stroke of luck. Hi Doug, we are applying and we also had questions about 1099-MISC vs 1099-NEC. Has the problem been resolved? This link also mentions forgiveness based on 1099-MISC and no mention of NEC. www.sba.com/funding-a-business/government-small-business-loans/ppp/1099-independent-contractors/ The most common question about PPP claims for the self-employed is the calculation of payroll. Many self-employed individuals, sole proprietorships, and independent contractors report different profits or seasonal fluctuations in the business each month, making it difficult to determine a fixed monthly payroll. As part of a larger aid package, Congress approved $284.5 billion in new funding for the paycheck protection program. The types of businesses and industries eligible for PPP loans have been expanded under the new bill. In addition, businesses that can demonstrate a reduction in gross revenues of at least 25% compared to the previous year and meet other requirements may be eligible for a second PPP loan. You`re probably concerned about scams because there have been a lot of them. In addition to talking to the lender, you may need to try to apply elsewhere. Hello, I am an Uber delivery driver.
I reported my earnings for 2019. Am I eligible for the PPP loan? If so, where can I submit? I have bank statements that show I was paid as an independent contractor, but since I`m an S-Corp, they don`t give me a Form 1099. I made the formal payroll for 2020 with my PPP money, but now the bank says I should never have received the loan (and that`s why I can`t get a discount) because I don`t have a c schedule for 2019. I have k-1s. In your instructions above, you said that we could use bank statements. Do you know if the sba agrees with this? Do you have any advice for me? You can apply if you are eligible. Keep in mind that when completing the application, you must initialize the following: «The applicant received a loan from the First Draw Paycheque Protection Program and used the full loan amount (including an increase) from the First Draw Paycheque Protection Program loan only for eligible expenses before disbursing the Second Draw Paycheque Protection Program loan.» The SBA has not provided detailed information on this scheduling issue, so you may want to get advice on how to make sure you use your recipes correctly to qualify for forgiveness. Hello, I am an independent contractor (Uber driver) and my line 31 on my schedule c a $ 3000, can I still apply for a PPP loan? I did the math and I`m only going to get $600. Thanks to adcance PPP is payroll-based – both before and with the new cycle.
Did he know that he could qualify based on Schedule C`s net profit? Perhaps he is also a better candidate for an EIDL loan or for rent assistance in the recovery plan. (I haven`t done any research on the latter.) Remember: You will need to attach Form 1040 Appendix C for 2019 to your PPP loan application to prove the loan amount, as well as a 2019 IRS Form 1099-MISC that lists the compensation of non-employees, the invoice, bank statement, or the book stating that you are self-employed. As a sole proprietor or independent contractor, you might qualify for a PPP loan if all of the following are true: The premise of the paycheck protection program is simple: The SBA supports loans to borrowers who need pay assistance due to the economic hardship of the coronavirus. Previously, only G/C businesses, tribal businesses, and businesses with up to 500 employees could apply for loans when the program was first launched last April. Now, sole proprietors, independent contractors and self-employed workers can also apply. Hello I applied for an SBA loan and I received the EIDL? Doesn`t anyone have a reason? I understand that I can also opt for PPP – is this true? Dave, the instructions for the first PPP loan draw show on page 37 how to calculate payroll for seasonal employers. But all the instructions I`ve seen for the self-employed (from page 31 of the same document) show that you use your annual net profit for 2019 OR 2020 – your choice – to calculate the loan amount. I have not seen any other Schedule C calculation for seasonal businesses.
For many freelancers, the forgiveness of PPP loans will be largely or entirely based on the replacement of the owner`s indemnity. We discuss this in detail in our article: Self-Employed: How to Fill Out the PPP Pardon Application. I understand that the lender is asking you to submit your Schedule C to verify the amount of your loan. If you want to use 2020, you can use a preliminary C schedule, but the SBA recommends that it be accurate. Can you fill out a preliminary form to determine the loan amount? 23. February 2021 – The SBA announced changes to the PPP and the revised financing formula for sole proprietors, independent contractors and the self-employed was published on 3 March 2021. We will continue to update this article as the SBA publishes further guidance on the new rules. The IFR states: a. If a borrower has repaid a PPP loan in full, they may reapply for a PPP loan in an amount to which they are eligible under the APPLICABLE PPP rules. (From the way I`ve read it, this means you can use 2020 or 2019 and you have the more flexible covered period of between 8 and 24 weeks.) Whether you apply to your first lender or a new lender depends on how the loan was declared.
See pages 3 and 4 of this guide. Hello, I am a sole proprietor and I started collecting PUAs in March 2020 because my business has been affected by Covid-19. Does this mean that I am not eligible for the PPP loan because I did not work during this period? I only worked until the middle. February of this year. If I qualify, how do I calculate my loan amount? I want to use some of the money for inventory because the reason I`m closed is because I didn`t make enough money to replenish it due to a lack of customers when the pandemic hit. this money will be what will allow my business to restart. My husband also works for me. Can I also pay for it with it? More information on eligibility for a second PPP loan can be found here. The provisional final rule of 3. March 2021 describes the following method to calculate the loan amount: The short answer is that I don`t know.
You need to talk to the lender to see what they recommend. My concern is whether the LLC you created in May 2020 will be considered a new business. Did you have the same ONE and company name or did you start a brand new business with your LLC? If it is treated as the same business, you can choose the period that provides the highest loan amount for your business. Again, this is a scenario where I think you need to get professional advice. Talk to your accountant first. If they can`t help, your Small Business Development Center or SCORE may be able to help. Here you will find your local resources. I am not sure you will be. Your independent contractors do not count as payroll, but you may qualify for 2019 or 2020 based on your net income from line 31 of Schedule C.
The formula can be found in this article. BlueVine is an online lending service that helps small business owners overcome their credit problems. BlueVine will help with SBA PPP loans for the self-employed and will work diligently to submit documents to the SBA and obtain funds. With a large pivot, Blue Vine will make PPP loans a priority and a valuable option. Information about loans can be found on the home page of the BlueVine website. I understand that if you pay yourself with an official payroll, you can apply for the loan and remittance on that basis. (You`re right – S Corps often drops a K-1.) The SBA has just announced a hotline for PPP issues. I encourage you to call them as soon as possible and see if you can get help. Here`s the information: If you have any questions or need help to forgive PPP, call the SBA PPP Customer Service team at (877) 552-2692, Monday through Friday, 8 a.m. to 8 p.m.m. to 8 p.m.m EST.
How you calculate your loan amount depends on how your LLC files its taxes. The SBA notes that «LLCs must follow the instructions that apply to their tax return status during the reference period used to calculate labour costs (2019 or 2020) – that is, whether the LLC filed (or will file) as a sole proprietor, partnership or corporation during the reference period.» I am a sole proprietor. I don`t have any employees. I have received my complete PPP loan application. Since I don`t have a payroll, I have to follow the 75% rule, which seems to be very important, or do I just have to pay the amount calculated myself after taking my net from my 2019 c calendar and a multiple of 8/52. When I do this calculation, it is not equal to 75% of my loan. For PPPs, if you submit to employees as a freelancer, there is a very specific calculation for the amount of your loan. Did you apply some time ago? If so, it could have been before the publication of this guide.
In any case, you can read it in the Treasury Guidelines on the Calculation of PPP Amounts by Type of Business. You may need to share it with your lender if you think they are not calculating your loan amount correctly. Hi Dan, this happens to me again and again. I do business with Bank of America (BOA). I am one accessory. BOA says I`m fine and I`m going to submit to SBA approval, but then I cancelled my loan and had to start all over again. Now I`m going through the same problem with a «commercial license.» There is no license to deploy. .