The SBA issued new guidance yesterday regarding the Paycheck Protection Program and self-employed individuals who file a schedule C with their 1040 for taxes.
This Interim Final Rule addresses rules of eligibility, calculating the loan amount, and loan forgiveness specifically as it relates to those who are self-employed.
If the loan is used for specific expenses during the 8 weeks following the disbursement of the funds, then the entire loan will be forgiven.
The new guidance also creates some new questions, specifically around the distinction between “payroll costs” and “owner compensation displacement.” Additional information on this topic is coming soon from the SBA.
Schedule C filers are eligible for a Paycheck Protection Program loan.
Partners are not eligible for a separate Paycheck Protection Program loan.
New guidance says that 75% of the PPP loan should be used for payroll costs.
The loan amount that qualifies forgiveness is an amount up to the full principal amount of the loan plus accrued interest, dependant upon the total amount spent over the 8-week period following the disbursement of the loan proceeds.
“Keep in mind that under the SBA’s First Interim Final Rule, 75% of the amount forgiven is required to be attributable to payroll costs.”