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May 5, 2022: The SBA has stopped accepting PPP applications due to insufficient funds. The SBA will continue to fund outstanding applications which have been already approved.
Explore your other loan options with this top lenders or go to the lending marketplace Lendio to obtain matched using the best offers for your business.
February 23, 2022 – The SBA has announced changes towards the PPP, and the revised funding formula for sole proprietors, independent contractors, and the self-employed was launched on March 3, 2022. We will continue to update this article as the SBA releases further guidance on new rules.
On December 27, 2022, a $900 billion COVID-19 aid package was signed into law as part of the larger omnibus bill funding the us government. This bill includes $284 billion in new funding for that Paycheck Protection Program (PPP), the federal loan program established to support businesses impacted by this lengthy pandemic. The SBA announced that certain lenders would begin accepting new PPP loan requests on January 11, 2022, and all participating lenders would follow shortly thereafter.
If you find yourself wondering how you are likely to make it through this pandemic, you're not alone. Our coronavirus hub has continuously updated information for small businesses trying to weather this pandemic.
If you’re a contractor or are self-employed, continue reading to learn how to apply for and get a PPP loan.
Can Contractors & Self-Employed Apply For PPP Loans?
The Paycheck Protection Program’s premise is straightforward: The SBA is backing loans to borrowers that require payroll assistance due to the economic hardships from the coronavirus. Previously, only S/C-corporations, tribal businesses, and businesses with up to 500 employees could make an application for loans when the program first launched last April. Now, sole proprietors, independent contractors, and self-employed individuals can apply too.
The terms for the loans are listed below: The PPP loans are made to cover payroll costs, including benefits, for individual salaries up to $100,000; rent; utilities from buildings rented before February 15th, 2022; interest on mortgage obligations; business-related software; necessary supplier costs; COVID-related worker protection measures; and property damage incurred from riots.
PPP loans for the self-employed and contractors can be used to give yourself an income (wages, commissions, tips). Qualified borrowers can apply for just two.Five times their average payroll cost for 12 months. This amount is capped at $100,000 with an annualized grounds for each employee.
One of the best areas of these PPP loans is the fact that they are forgivable if you use the loan on operational costs (payroll first) throughout the 24 weeks following loan disbursement. (That’s assuming you stick to the loan forgiveness stipulations outlined within the Paycheck Protection Flexibility Act, with a mandate that 60% from the loan can be used for payroll alone.)
PPP loans have a 1% rate of interest, financing term of up to five years with no prepayment penalty, along with a six-month payment deferral. (Side note: In case your business hasn’t been operational for a twelve month, the federal government provides alternative ways to measure average payroll.)
PPP Requirements For Self-Employed People
PPP loans are made to reach as many small business owners as possible, such as the self-employed. As the terms are broad, the very first qualification is you must demonstrate a need in line with the current COVID-19 world. Be sure to specify that you are seeking aid associated with the COVID-19/coronavirus disaster.
For people who received a first draw PPP loan in 2022, what's needed are more precise: You’ll need gross receipts from the calendar quarter in 2022 that show at least a 25% reduction in gross revenue in the same quarter in 2022 to qualify for a second draw PPP loan.
If you collect 1099s or be employed in the gig economy, you're contained in the January 11th, 2022, loan rollout. Also included are those who have 1065s or 1120s without any employees.
What You have to Obtain a PPP Loan
If you’re applying for a PPP loan being an independent contractor or freelancer, you will need to gather the required paperwork to obtain your loan moving. In the eyes of the IRS, you will be treated as a sole proprietor. You will need your Schedule C online 31 based on your 1099s from your 2022 or 2022 taxes (whichever was used to calculate the loan amount). This number is the net gain and can be accustomed to determine salary. You may even accumulate your 1099s together from the past year and divide it by 12 to get a rough monthly estimate.
In February 2022, President Joe Biden announced that eligible sole proprietors could also calculate the maximum amount of their PPP loan by utilizing gross income. If you plan to use this to calculate the loan amount, you will have to use line 7 from your Schedule C. The dpi could be divided by 12 to calculate your gross monthly income.
Making sure you've verified income and updated bookkeeping, including:
- 2022 or 2022 tax returns
- Federal Tax Identification Number
- Payroll tax filings
- 1099s-MISC records
- Income and expenses, bank records
Forgiveness Requirements For Self-Employed
Forgiveness requirements for PPP loans for self-employed personnel are largely identical to the requirements for any business trying to have their PPP loans forgiven. The details concerning which form you’ll need to submit are spelled out within our article on PPP forgiveness, which we encourage you to definitely check out. Whichever form you use, keep in mind that you have to submit your application for your lender, not the SBA itself.
You’ll have to spend your loan proceeds on qualifying expenses to have your loan forgiven. Your forgiveness application form should spell out what kinds of documentation you’ll have to provide that shows the way you spent the loan funds. Forgivable expenses include the following:
- 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 may also make use of your funds to pay for expenses incurred throughout the 24-week period.
Naturally, the necessity that the PPP loan-receiving entity maintains its full-time staff and payroll does not affect the self-employed.
Where To Apply For A PPP Loan
There are gone 1,800 banks and lenders preapproved with the SBA to help meet the need and respond to the rush of applications. Be sure to have all your data ready. Experts say it’s best to go through an FDIC-insured bank (other lenders might be brokering for a small fee — better to go to the source).
As most banks are operating remotely, many are telling borrowers to not contact branches directly but to utilize their online application. It’s best to check with your local community bank, although not all small banks are equipped to work fast on SBA loans. As a next resource, check out the SBA Preferred Lending Partners.
In some instances, using a matchmaker may be the approach to take.
Here are four lending vendors that'll be offering Paycheck Protection loans:
Lendio
Lendio is also a loan matchmaker and can focus on account to aggregate loan options. Links to try to get PPP loans will be available on Lendio’s site. Lendio makes it simple to use and compare options, also it advertises funding within 24 hours. Due to the the CARES Act, there are no fees for the borrower.
Get Started with Lendio
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Fundera
Fundera works together with smaller businesses to match all of them with their best loan options, and deems it among the best loan matchmaking vendors out there. The experts at Fundera will likely be opening their application process for PPP loans the week of January 11th. After providing your average monthly payroll and number of employees, Fundera will contact you with loan options. If the thought of trying to get a PPP loan has me overwhelmed, consider dealing with Fundera.
Get Started with Fundera
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Credibly
Credibly has funded small businesses with over $1 billion and it is equipped and able to assist with PPP loan applications. From the first page of Credibly’s website, borrowers will discover a connect to the application. Customer service is efficient and can walk first-time borrowers through the process with efficiency.
Get Began with Credibly
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BlueVine
BlueVine is definitely an online lending service focused on helping small businesses conquer their borrowing struggles. BlueVine will be assisting with SBA PPP loans for self-employed individuals and working diligently to submit paperwork to the SBA and secure funds. Having a big pivot, Blue Vine will be making PPP loans important and is a valuable option. Lending details are available on the leading page of BlueVine’s website.
Get Began with BlueVine
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Be Prepared & Apply As Early As Possible
There’s a time when steady but very slow wins the race. There’s additionally a time when you really need to light a fireplace and work as fast as possible. When it comes to applying for these Paycheck Protection loans, what we’ve learned in the first phase in 2022 is the fact that working quickly with a matchmaker might be the fastest method of getting your application seen and processed.
The stimulus for the PPP loans is limited to $284 billion this time around. That staggering amount will not go so far as you want it might, but as we all know, the cash is sorely needed for small businesses and also the self-employed all over the nation, and also the loan forgiveness choices are generous.
Looking for more resources once we navigate this pandemic? Our coronavirus hub comes complete filled with useful information for businesses. Have questions for all of us? Leave them within the comments, and we’ll help lead you right place to find your answer.
