The U.S. Small Business Administration (SBA) continues to issue guidance on calculations and loan forgiveness for loans issued under the Paycheck Protection Program (PPP). The latest round of updates includes clarification for self-employed individuals. However, with today’s announcement that the SBA has reached its $349B lending limit for this program, those who haven’t yet submitted an application to request a PPP loan are out of luck unless Congress approves additional funding.
The most recent guidance by the SBA clarifies the maximum amount a Form 1040 Schedule C filer can borrow and the documentation that is required to be included with the submission of the application. The starting point of the calculation is the individual’s 2019 Form 1040 Schedule C, which will need to be attached to the loan application as support for the amount being requested. The applicant will also need to provide documentation such as a 2019 IRS Form 1099-MISC detailing nonemployee compensation received, invoice, bank statement or book of record to establish he/she is self-employed.
The interim final rule also made it clear that partners in a partnership are ineligible to submit a separate PPP loan application for themselves as self-employed individuals. The self-employment income of general active partners is permitted to be reported as a payroll cost, up to $100,000 annualized, on a PPP loan application filed by the partnership.
Please click here for the FAQs issued on April 15.
Please click here for the new interim final rule.
We will continue to update you as we get more information on Coronavirus-related legislation and guidance that may impact you. Continue to check back here for the most up to date tax information and changes in response to Coronavirus. If you have more questions contact an MCB Advisor at 703-218-3600 or click here.
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