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Self-employed and gig workers who have been waiting for new rules that would mean larger forgivable loans through the Paycheck Protection Program can now proceed with their applications.
Beginning Friday, the Small Business Administration will be ready to accept and process updated PPP applications from sole proprietors who want to take advantage of a new loan calculation, the agency confirmed.
This means sole proprietorships can finally file their application with lenders, who can forward them to the SBA for processing under the new credit calculation guidelines.
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The changes come after the Biden administration announced updates to PPP in late February, including the revised sole proprietorship loan calculation and new eligibility rules for some non-residents, those with certain criminal records, and those who defaulted or were overdue with their debts student loans. .
In addition, the administration announced a 14-day priority window for companies with fewer than 20 employees to submit an application to PPP. The period started on February 24 and ends on March 9.
While the focus of the priority period was to give the smallest businesses, which are disproportionately owned by women and minorities, a boost in receiving funding, the timing of the new loan calculation rule has confused some. The SBA did not release guidelines on the recalculation to lenders until March 3, and was not ready to process updated requests in its system until Friday.
What to Know Before Signing Up
Now that the SBA is ready to accept and process applications, small businesses should be able to apply for PPS and be subject to the new loan calculations.
To be sure, some lenders may still be uploading the new applications into their system, so business owners should confirm that they have the correct forms to submit an application.
The updated PPP applications for self-employed and sole proprietorships filing IRS Form 1040 Schedule C now ask for the total amount of gross income, found on line 7 of the tax form. Previously, Schedule C filers applying for PPP loans were asked to provide the SBA with their net profit, starting at line 31 on the form.
Those applying for a first-draw PPP loan must use Form 2483-C and those applying for a second draw loan must use Form 2483-SD-C, which contains the new calculation information.
The priority application window
For small businesses covered by the new rule and wanting to take advantage of the priority application period, time is ticking. The window closes at 5 p.m. ET on March 9, after which lenders can process requests from small businesses of all sizes.
Still, sole proprietorships will be able to apply for and see loans processed by lenders after the priority window closes. The deadline for the overall program is currently March 31, unless extended by Congress.
Plus, backers say they don’t think the program will run out of money before the March deadline. This year through February 28, the SBA had approved 2.2 million loans for more than $ 156 billion, slightly more than half of the $ 284 billion the program had when it reopened in January.
“Given the rate at which the funds have disappeared, it doesn’t look like they will all be used by the March 31 deadline,” said Alex Prombaum, president of Liberty SBF, a non-bank lender. “The priority window may expire, but it doesn’t mean people are left out in the cold.”
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