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May 5, 2022: The SBA has stopped accepting PPP applications because of lack of funds. The SBA continues to finance outstanding applications which have been already approved.
Explore your other loan options with this top ten lenders or visit the lending marketplace Lendio to get matched with the best offers for your business.
February 23, 2022 – The SBA has announced changes to the PPP, together with a revised funding formula for sole proprietors, independent contractors, and the self-employed. We'll update this short article once the SBA releases further guidance on the brand new rules.
The latest COVID-related stimulus bill was signed into law on December 27, 2022. The Paycheck Protection Program (PPP) and Economic Injury Disaster Loan (EIDL) programs are expected to return in January 2022. Find out more about the brand new legislation in our article, Congress Passes New PPP Legislation, Targeted EIDL Program.
With this latest round of PPP funding, businesses — even the ones that received a PPP loan during the first funding period — will have a second chance to take advantage of the popular relief package. This includes businesses whose owners might have assumed they didn't qualify because of being sole proprietorships with no employees (this status technically applies to freelancers too).
In April, the SBA released guidance in the form of an “interim final rule” clarifying who and doesn’t entitled to the PPP. It specifically addresses the issue of PPP funding for sole proprietorships and businesses without employees. The newest interim final rules released through the SBA following the latest aid package was passed in December confirm this guidance.
Read onto learn more about PPP sole proprietor funding.
Am I Qualified For any PPP Loan?
If you’re a person with self-employment income, you are able to qualify for a PPP Loan like a sole proprietor if you meet the following criteria:
- You filed or will file an application 1040 Schedule C for 2022
- Your principal host to residence is in the United States
Note when you’re inside a partnership, you are still entitled to PPP, but you should not submit another application for yourself like a self-employed individual. Instead, you’ll file just one application for that company with every partner’s income reported as a payroll expense. This is designed to reduce the volume of applications and eliminate confusion regarding which companies and partners have applied.
Be conscious that applying for a PPP to cover self-employment income may complicate your application for state-level unemployment insurance. Take a glance at those guidelines to make sure you’re maximizing your eligibility.
How Much Money Can one Apply For?
Here’s how the interim final rule says to calculate the most you can apply for:
- On line 31 of the 2022 IRS Form 1040 Schedule C, you’ll find your net profit. If it’s over $100,000, reduce it to $100,000. When the number is zero or less, you’re not eligible.
- Divide the quantity you reached from step 1 by 12 to get your average monthly net gain.
- Multiply your average monthly net gain by 2.5.
- Add the outstanding quantity of Economic Injury Disaster Loan (EIDL) made between January 31, 2022, and April 3, 2022, that you’re trying to refinance, minus the amount of any advance you received under an EIDL COVID-19 loan, which does not have to be paid back.
If you’re applying as a partnership, you’ll treat each partner’s income as a payroll cost. The maximum amount can be $100,000 annualized. Otherwise, consult our guide on applying for a PPP Loan.
Calculating PPP Amount borrowed Using Gross Income
On February 22, 2022, President Joe Biden announced changes to how sole proprietors can calculate their maximum PPP loan amount. The IRS provided further assistance with March 3, 2022, wearing down how sole proprietors may use their revenues to calculate how much cash they can receive through the PPP.
In to calculate your loan amount using revenues, you must be a sole proprietor that has filed a Schedule C. If so, here’s how you calculate your loan:
- On line 7 of the 2022 or 2022 IRS Form 1040 Schedule C, you’ll find your revenues. If it’s over $100,000, reduce it to $100,000.
- Divide the quantity you arrived at from step 1 by 12 to obtain your average monthly revenues.
- Multiply your average monthly revenues by 2.5.
- Add the outstanding quantity of Economic Injury Disaster Loan (EIDL) made between January 31, 2022, and April 3, 2022, that you’re trying to refinance, minus the amount of any advance you received under an EIDL COVID-19 loan, which does not have to be paid back.
What Should i have To use?
The first thing you’ll require is a lender, which I will discuss within the next section. As government programs go, the PPP application is surprisingly short. No, really, it’s 3 many pages.
Your specific lender may have particular document requirements, however, you should be prepared to provide tax documents, organizational documents, and government-issued identification. Since you don’t have employees, you won’t have to worry about W-2s and payroll documentation.
How Will i Make an application for Forgiveness?
You’ll have to make an application for forgiveness with the lender that serviced your PPP loan. The facts concerning which form you’ll have to submit are explained in our article on PPP forgiveness. Whichever form you utilize, remember that you need to submit your application to your lender, not the SBA itself.
You’ll should also spend your loan proceeds on qualifying expenses to have your loan forgiven. Your forgiveness application form should spell out what types of documentation you’ll need to provide that shows the way you spent your loan funds. Forgivable expenses include the following:
- Payroll costs
- Mortgage interest
- Rent
- Utilities
- Software
- Property damage from civil unrest
- Necessary supplier costs
- COVID-related protective measures
Additionally, you must spend your loan proceeds within 24 weeks of disbursement. You can also make use of your funds to cover expenses incurred throughout the 24-week period. Lastly, you must maintain your full-time staff and your payroll after receiving your funds.
Again, read our piece on PPP loan forgiveness for more details.
Where Can I Apply?
Unlike the Economic Injury Disaster Loan program, PPP Loans aren’t made directly through the SBA. Instead, you’ll have to make use of a third-party lender. If you prefer to utilize a bank , when the program restarts, you should use the SBA’s Lender Match tool to discover an SBA lender near you.
If you don’t have an existing relationship with a bank or credit union, you may also apply through online lenders which have partnered using the SBA.
Here are a few popular and reliable online lenders which have been approved to process PPP Loans. The program will open again imminently, so when the SBA releases the updated application, these lenders is going to be processing them.
1) Lendio
Lendio is yet another business financing platform that suits applicants with one or more of its partnered lenders. Lendio continues to be very vocal concerning the PPP, to the degree it converted into something of the advocate for the program after the previous round of funding. Lendio is ready and waiting to leverage its platform to get cash-starved businesses the help they need once this latest round officially kicks off.
Get Started with Lendio
Read our in-depth review
2) Fundera
Fundera is a popular matchmaking service that pairs applicants and lenders from its pool of partners. Should you apply for the PPP through Fundera, exactly the same principle applies: Fundera will shop the application amongst its network of SBA-approved lenders. Considering a few of the bottlenecks applicants have encounter with traditional lenders, this may not be a poor choice for companies that want to maximize their chances of getting their application through the rush.
Get Began with Fundera
Read our in-depth review
3) Credibly
Credibly isn’t an aggregate platform such as the previous two options, but it will be having its online application infrastructure to permit businesses to try to get PPP Loans online. Credibly’s setup was quite user-friendly during the last round, therefore if you’re having concern with crossing all of your t’s and dotting your i’s, you’ll appreciate the way Credibly walks you thru the process.
Get Began with Credibly
Read our in-depth review
4) BlueVine
If you’d prefer to make use of a reliable online lender on your application, BlueVine is among the best. It usually offers factoring invoices, term loans, and contours of credit, but during the COVID-19 crisis, it’s getting involved in the federal PPP. As is the case using the other available choices above, you’ll be able to take advantage of BlueVine’s convenient infrastructure to submit your information towards the SBA.
Get Started with BlueVine
Read our in-depth review
Other Resources For Coronavirus-Affected Small Businesses
To help businesses navigate the unprecedented difficulties from the COVID-19 crisis, we’ve made a centralized hub of guides and resources. We’re updating them frequently, so check it.
