Paycheck Protection Program
Additional Eligibility Criteria & Requirements for Certain Pledges of Loans
Key provisions for our clients and friends
On April 14, 2020 the SBA issued new guidelines to clarify original communications regarding eligibility and certain requirements for those applying for the PPP loan. If you file a Schedule C with your personal tax return, the following table summarizes the maximum PPP loan calculation.
Although the Act makes businesses in operation on 2/15/2020 eligible for PPP, self-employed individuals will need to rely on their 2019 Form 1040 Schedule C because it provides verifiable documentation on expenses between Jan 2019 – December 2019. Expenses incurred between January 1, 2020 – February 14, 2020 may not be considered because of the lack of verifiable documentation. SBA will issue additional guidance for those individuals with self-employment income who: (i) were not in operation in 2019 but who were in operation on February 15, 2020, and (ii) will file a Form 1040 Schedule C for 2020. This guidance has not yet been released.
Regardless of whether you have filed your 2019 tax return, you must provide your From 1040 Schedule C with your PPP loan application to substantiate the applied for PPP loan amount and a 2019 IRS Form 1099-Misc detailing non - employee compensation received, invoice, bank statement, or book of record that establishes you are self-employed as of Feb. 15, 2020.
Restrictions for Partnerships - Partners in a partnership are not eligible to submit a PPP loan application as a self – employed individual. These amounts should be reported as payroll cost up to $100,000 on the partnership’s application.
Loan Forgiveness and Required Documentation
Amounts paid for owner compensation are now included in amounts eligible for loan forgiveness. Owner compensation forgiven amounts for individuals with self-employment income will be limited to eight weeks’ worth of 2019 net profit reported on the 1040 Schedule C Line 31.
Additional required documentation to substantiate forgivable amounts includes Form 941 and state quarterly wage unemployment insurance tax reporting forms or equivalent payroll records. Evidence of business rents, mortgage interest, utility payments will also need to be submitted if PPP award amounts were used for these expenses during the eight-week covered period. The eight-week covered period begins the day after the loan is funded.
EIDL Grant Update - Per recent communication from SBA to EIDL applicants, EIDL advance amounts are $1,000 per employee with a maximum amount of $10,000.
We at TJ Advisors are committed to bringing you the most relevant and up to date information in an effort to help your business stay on track during this period of uncertainty. Please note that not all provisions, exceptions, exclusions, and special circumstances are included in order to maintain brevity. The full text of the release can be found here: Interim Final Rule - Additional Eligibility Criteria and Requirements for Certain Pledges of Loans. Please reach out directly so that we can provide the business support you need in these unprecedented times. We are here for you, contact us today at firstname.lastname@example.org or 972-629-9164.
Refer to Paycheck Protection Program Interim Final Rule page for additional info on guidance issued by the US Department of the Treasury on 4-2-2020
Refer to Family First Act & CARES Act page for additional COVID-19 Related Payroll Tax Credits