Note that you cannot use PPP funds to pay for benefits such as health insurance premiums or pension benefits. In addition, you cannot pay contract workers with your PPP funds. You are only allowed to use them to pay W-2 employees. However, you can choose to allocate your homeowner compensation replacement funds to contractors, as the IRS does not dictate how to use income with this classification. Your lender will review your records (see below) and make an assessment of the credit remittance within 60 days of your application. The SBA will then repay its lender the balance of the amount of your loan. Please note that if you received your PPP loan BEFORE March 3, 2021 and you are a sole proprietor, independent contractor or self-employed, you expect net profit. If you take out your PPP loan AFTER the 3rd. March 2021 and are a sole proprietor, self-employed or self-employed, calculate with GROSS PROFIT.
Self-employed individuals can use a simplified pardon application called Form 3508S. This form applies to you if your loan amount is $150,000 or less. Today, I was approved for a $15,600 PPP loan, which is great, but I`ve been getting $1,050 a week for unemployment since March. Excellent article, Gerri! Very useful. Have you recently seen guidelines for independent businesses that were founded in late 2019? For example, my company was founded on October `19, so my Schedule C net profit shows only 1/4 of my expected net profit for the entire year 2020. With the current forecast, I would only be entitled to a discount of 3.8% (8/52 x 1/4) of my expected net profit for the whole of 2020. The exception is for businesses with a NAICS code of 72 that have taken out a second draw loan based on a net profit of 3.5x. More information about these loans can be found below. Apart from the exchange of the owner`s remuneration, there are stricter requirements for independent PPP beneficiaries to be eligible for forgiveness. The categories that are eligible for loan forgiveness are: Let`s look at two examples to better understand how to calculate the amount of your rebate: I have a hard time understanding how line 11 – “Remittance Amount” for the sole proprietor/entrepreneur sets out the rules that the amount requested for the sole proprietor/contractor rebate does not exceed eight weeks of compensation starting in 2019. and is limited to $15,385.
So, if your net income brings you to the capped amount and it is the authorized refund, why reduce this application form to 75% of that amount (using the smallest number of lines 8, 9, 10 = 75% of the cap)? Sole proprietors and independent contractors find the PPP loan particularly attractive because of the concept of “owner`s compensation share” or “owner compensation,” which can give them a full discount so they can use the funds as they wish. This is how forgiveness works for the self-employed. If you claim the rebate solely on the basis of compensation for the owner`s compensation (and without any other non-payment costs), the SBA states that form 1040 Schedule C of 2019 or 2020 provided by the borrower at the time of the PPP loan application must be used to determine the amount of net profit allocated to the owner for the period covered. Once you`ve filled out the business and loan information, you`ll need to list your payroll and non-salary expenses, such as: The PPP limits compensation to an annual salary of $100,000. Therefore, for sole proprietors or independent contractors without employees, the maximum possible PPP loan is $20,833, and the total amount is automatically eligible as a portion of the owner`s compensation for the rebate. When I filled out my daughter`s PPP application, we opted for the Option 2 schedule to calculate her company`s annual income, as she had a good first quarter in 2020. We have provided their Appendix C for 2019 as well as a table showing the quarterly amounts of revenues and expenses for the period from 4/1/2019 to 30/03/2020, as well as a breakdown of revenues and expenses by quarter in the 2019 calendar. It received funding based on the total table for the period covered by Option 2 and not on the basis of its Calendar C for 2019. If she asks for a pardon, should she simply provide her income table from 1.04.2019 to 30.03.2020 or her 2019 Appendix C or both, as we did with her application? If your replacement amount for homeowner compensation exceeds the amount of your PPP loan, you just need to enter this amount in “Salary Cost” and you are entitled to a full remission of your PPP loan. .