The SBA issued a new interim final rule that provided guidance for calculating the maximum PPP loan amounts for self-employed individuals who filed a form 1040 Schedule C, Profit or Loss from Business for 2019. Additional guidance will be issued for those individuals who were not in operations in 2019, but were in operations on February 15, 2020 and will file a Schedule C for 2020.
According to the new guidance, self-employed partners that received K-1 income from a partnership, may report that income as compensation/payroll costs, up to an annualized amount of $100,000 on a PPP application filed by the Partnership (multi-member LLC) on their behalf.
Businesses with 500 or less employees were able to apply for PPP on April 3rd. Self-employed individuals that file a Schedule C with their 1040, were allowed to apply beginning on April 10th. The Paycheck Protection Program (PPP) is part of the $2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act, P.L. 116-136. Treasury and the SBA are offering $349 billion in forgivable loans that small businesses impacted by COVID-19 can use to cover expenses such as payroll, rent, utilities, and mortgage interest.
The PPP was created as a new 7(a) loan option overseen by Treasury and backed by the SBA, which is authorized to provide a 100% guarantee to lenders on loans issued under the program. The full principal amount of the loans and any accrued interest may qualify for loan forgiveness if the requirements are met.
Biana Mester, Enrolled Agent