First Draw PPP Loan If You Have No Employees
(If you are using 2020 to calculate payroll costs and have not yet filed a 2020 return, fill it out and compute the value.) If this amount is over $100,000, reduce it to $100,000. If both your net profit and gross income are zero or less, you are not eligible for a PPP loan.
Do I qualify for a first or second PPP loan? For first-time PPP loans, the majority of small businesses with fewer than 500 employees and select types of businesses with fewer than 1,500 employees are able to apply if they experienced revenue declines in 2020.
There is a 30-day timeframe to appeal denials of forgiveness to the SBA's Office of Hearings and Appeals (OHA). If the SBA elects to deny—in full or in part—a borrower's forgiveness application, the SBA will send the borrower's lender a Final Loan Review Decision.
To qualify for a PPP loan, self-employed individuals must meet the following criteria: You were in operation as of February 15, 2020. You are an independent contractor, sole proprietor, or other qualifying business classification with self-employment income. In 2020, you filed a Schedule C or Form 1040.
Who is “self-employed” for purposes of applying for a PPP Loan? Only sole proprietors, sole members of LLCs, and independent contractors may at this time apply as self-employed individuals for PPP Loans.
Notice: PPP ended May 31, 2021
The PPP ended on May 31, 2021. Existing borrowers may be eligible for PPP loan forgiveness. SBA also offers additional COVID-19 relief.
It is illegal to make false statements to a financial institution, so if you were to lie on a PPP loan, you could be charged with this federal crime. This act is criminalized under section 1014 and if convicted, you can face quite a hefty fine along with imprisonment for up to 30 years.
Wire Fraud: If you used a device, like telephone, internet, etc, to defraud an institution in order to gain funds from a PPP loan – you can be convicted of wire fraud. Penalties for wire fraud can include a prison sentence up to 20 years, and in addition – restitution to anyone impacted.
PPP Round 3 applies to businesses with 500 or fewer employees, or if you're getting a second draw loan, 300 or fewer. They also apply to businesses that are categorized as being “Accommodation or Food Services” and have 500 or fewer employees per location (300 if you need a second draw loan).
In extremis — PPP Money Is Not “Free” So Applicants & Recipients Need to Beware. As most of the population is aware, to try and preserve the economy and businesses viable during the COVID-19 pandemic, congress passed the CARES Act.
IMPORTANT UPDATE FOR 2021: Congress has approved an extension of the PPP loan program. SBA will accept applications through May 31, 2021, including “second draw” PPP loans for businesses that received PPP funding in 2020.
The loan calculation itself requires you to use your annual salary, and the annual salary of any W2 employees whose primary residence is the United States. The PPP sets a cap on salaries of $100,000—if you or any of your employees make more than that, you can only write $100,000 on your application.
60/40 Rule. The 60/40 rule states that 60% of your PPP loan must be used on payroll costs, and the remaining 40% can be used on other eligible expenses (rent, mortgage interest, utilities, etc.). However, as a self-employed worker, you can claim all 100% of your PPP loan as payroll under compensation replacement.
If you're self-employed, you can show proof of income in the following ways: Use a 1099 form from your client showing how much you earned from them. Create a profit and loss statement for your business. Provide bank statements that show money coming into the account.
The maximum PPP loan a sole proprietor can receive is based on an annualized salary of $100,000 which caps the loan amount at the lesser of $20,833, or net income multiplied by 2.5/12. Note that this compensation cap applies across all businesses in which a taxpayer has an ownership stake.
Similar to independent contractors, you are a sole proprietor or self-employed person and can use your PPP loan to cover wages, income, and net earnings for you as an individual, again capped at that $100,000 per employee in annual earnings.
You'll use your gross income—not your net income—to calculate your PPP loan amount. Take your gross income (not to exceed $100,000), divide it by 12, and multiply that number by 2.5 to get your loan amount.
Key Takeaways. A third round of Paycheck Protection Program (PPP) loans was authorized by the passage of H.R. 133: Consolidated Appropriations Act, 2021 into law on Dec. 27, 2020.
If you never received a PPP loan and are wondering if there will be another PPP loan for 2022, it seems very unlikely. Nothing has been announced. Still, we can't predict what the government's response will be if the pandemic takes another turn for the worse.
Borrowers can apply for a Second Draw PPP Loan until March 31, 2021, through any existing SBA 7(a) lender or through any federally insured depository institution, federally insured credit union, eligible non-bank lender, or Farm Credit System institution that is participating in PPP.
An SBA-backed loan that helps businesses keep their workforce employed during the COVID-19 crisis. Notice: The Paycheck Protection Program (PPP) ended on May 31, 2021. Existing borrowers may be eligible for PPP loan forgiveness.
The PPP has lent itself to fraud and abuse, with the SBA Office of Inspector General recently noting that $3.6 billion in PPP funds were made to potentially ineligible recipients (read about the OIG report here.) But it is also a trap for the unwary and the arrogant.
PPP loans (the full principal amount and any accrued interest) may be fully forgiven, meaning they do not have to be repaid. If you do not apply for forgiveness, you will have to repay the loan.
Can I get a PPP loan if I started my business in 2021? Currently only businesses in operation as of February 15, 2020 may apply for a PPP loan.