Change in PPP loans means more funding to solopreneurs and freelancers


  • A change in the Paycheck Protection Program means more funding for solopreneurs and freelancers.
  • The update will allow self-employed individuals to apply using gross income, instead of net income.
  • The SBA will also set aside $1 billion in PPP loans for these types of businesses with no employees.
  • Visit the Business section of Insider for more stories.

The Biden administration on Monday announced changes to the Paycheck Protection Program (PPP) that will provide more funding for solopreneurs and freelancers. 

The update will allow self-employed individuals to apply using gross income, instead of net income or profit. This will automatically increase the total loan amount these business owners are eligible to receive through the Small Business Administration (SBA).

The change is an effort to level the playing field for solopreneurs who made small profits in 2019, if they were profitable at all. Within the first four months of the PPP program, roughly 300 businesses received loans of $99 or less and some got just $1, The New York Times reported. 

The SBA will also set aside $1 billion in PPP loans for these types of businesses with no employees and only businesses with 20 or fewer employees can apply for two weeks beginning Wednesday. 

How to apply for PPP as a sole proprietor

Moving forward, the SBA will now allow sole proprietor businesses to calculate their maximum PPP loan amount using the gross income line on their Schedule C form.

Most borrowers can receive up to 2.5 times their average monthly payroll costs, but those in the accommodation or food-services sectors can receive up to 3.5 times that amount. 

Qualifying salary for each individual is capped at $100,000 annually, according to Brock Blake, founder and CEO of small business loan marketplace Lendio. “Anything you pay yourself over that, prorated for the calculation period, won’t be counted,” he previously told Insider

Only businesses that were open by February 15, 2020 are eligible to apply.

Previous PPP borrowers can apply for the second draw if they can demonstrate at least a 25% reduction in gross receipts in the first, second, or third quarter of 2020 relative to the same period in 2019. There are alternative calculations for seasonal businesses and businesses started after 2019.

The SBA will only accept applications from businesses with 20 or fewer employees for two weeks beginning Wednesday, February 24 through Tuesday, March 9. 

Applications will close on March 31, unless Congress extends the program through another stimulus bill.



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