![]() ![]() “… f a Schedule C filer elects to use gross income to calculate its loan amount on a First Draw PPP Loan and the borrower reported more than $150,000 in gross income on the Schedule C that was used to calculate the borrower’s loan amount, the borrower will not automatically be deemed to have made the statutorily required certification concerning the necessity of the loan request in good faith, and the borrower may be subject to a review by SBA of its certification.” The New Calculations THERE IS MUCH MORE GUIDANCE TO COME ON THESE ISSUES!ĬAUTION: This isn’t either good or bad, but the SBA is saying that if you use these new calculations based on Gross Income, and the amount of Gross Income you are basing the calculation on is more than $150,000, you are not automatically given “Safe Harbor”. Even under that rule, however, if your First-Draw Loan has been forgiven, you are out of luck on that front as well. GOOD: There are some other changes tucked in here that don’t quite take center-stage, including PPP eligibility for those who are delinquent or defaulted in federal student loans, and those who have non-financial fraud felony convictions in the past year, both of which previously were bars to eligibility.īAD: There still seems to be a gray area regarding how this will work with the limited ability announced in January 2021 to increase First-Draw PPP loans based on current rules. (At least for now, I have already seen members of Congress seeking to change this, but that is the rule for now). GOOD: By using the calculation below for self-employed, independent contractors, and sole proprietors, many more micro-businesses will be able to take part in the PPP.īAD: This change is NOT retroactive, which means that if you have already gotten a First-Draw PPP and a Second-Draw PPP, you are out of luck. Here is a quick rundown of some of the major points: Now, you can base your PPP calculations on Line 7 (or, if you have employees, a slightly more complex calculation noted below).īut like all programs, this change has good and bad elements. This meant that If you made $50,000 and had $55,000 in expenses, your Line 31 would be negative, and you could not get a PPP. ![]() Previously, you could only base the amount of your “Owners Replacement Compensation” on Line 31 (Net Income) of your Schedule C. This rule is a welcome change to the previous system which left many creators and the self-employed out in the cold. But if you haven’t applied, and this rule might apply to you, PLEASE WAIT UNTIL YOU CAN APPLY UNDER THESE NEW RULES! This change is NOT retroactive to previously approved and funded loans.Īs always, remember that I am not a tax attorney or account, and it is critical that you seek out specific advice for your situation. Note that as before, you will apply for a PPP loan through your bank or financial company, and they will not be ready for these changes today. ![]() Stay tuned to, on Instagram and our weekly newsletter to see when I will be doing more classes and webinars on this. The devil is in the details, however, so let’s dive into the new rules, how this is different, and how this will affect many visual creators and the self-employed. This means that if you had a negative or low amount and could not get a PPP loan, or the loan amount was not worth getting previously, you may now be eligible. Less than 24 hours ago, late Wednesday, March 3, 2021, the Small Business Administration posted the latest revision to the Paycheck Protection Program (PPP) and these revisions have MAJOR effects on how sole proprietors, independent contractors, and others who file taxes using IRS Form 1040 Schedule C.īottom line? New applicants can now use “Gross Income” (Line 7) as a basis for their PPP amounts. ![]()
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