Paycheck Protection Program application. Credit: G.Tbov/Shutterstock.com New PPP Rules Benefit Self-Employed Individuals
This article discusses PPP rules in a new Interim Final Rule and in new Frequently Asked Questions. The New IFR and New FAQ account for changes made to the PPP by the Consolidated Appropriations Act, 2021, and incorporate directives by the Biden Administration to create greater available PPP funds for self-employed Schedule C filers by permitting the calculation of PPP loan amounts to be based on gross income rather than net earnings.
April 20, 2021 at 11:30 AM
9 minute read
Last year, self-employed individuals who conducted their business without any employees could qualify for a Paycheck Protection Program (PPP) loan in an amount equal to approximately 20.8% (2.5 months divided by 12 months) of their 2019 annual net earnings from self-employment not to exceed $100,000, or no greater than $20,833 (20.8% of $100,000 capped). Since the calculation of net earnings for self-employment is conducted after deductions for fixed and other business expenses that a small business must cover to stay afloat, annual net earnings from self-employment can often be a very small number resulting in an extremely small PPP loan amount. For example, annual net earnings from self-employment of $5,000 would qualify for a PPP loan of just $1,042 (20.8% of $5,000).
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