To mitigate the risk of fraud, a Schedule C filer that reports more than $150,000 gross income to calculate its first-draw PPP loan will not be able to claim the safe harbor provided for borrowers that, together with their affiliates, received PPP loans of less than $2 million.

Covered worker protection expenditures, as defined in Section 7A(a) of the Small Business Act, to the extent they are deductible on Schedule C.

Covered supplier costs, as defined in Section 7A(a) of the Small Business Act, to the extent they are deductible on Schedule C.

Covered property damage costs, as defined in Section 7A(a) of the Small Business Act, to the extent they are deductible on Schedule C.

Covered operations expenditures, as defined in Section 7A(a) of the Small Business Act, to the extent they are deductible on Schedule C.15, 2020 (these are not eligible for PPP loan forgiveness). Interest payments on any other debt incurred before Feb.Business utility payments (for borrowers entitled to claim a deduction for such expenses on their 2019 or 2020 Schedule C, depending on which one was used to calculate the loan amount).Owner compensation (if net profit is used) or proprietor expenses (business expenses plus owner compensation if gross income used).These borrowers may use their PPP proceeds to cover the following: The IFR provides different sets of maximum loan calculation instructions for Schedule C filers with no employees (see pages 10–11 of the PDF) and with employees (see pages 11–13).

If a Schedule C filer has no employees, the borrower may simply choose to calculate its loan amount based on either net profit or gross income. If a Schedule C filer has employees, the borrower may elect to calculate the owner compensation share of its payroll costs based on either net profit or gross income minus expenses reported on lines 14 (employee benefit programs), 19 (pension and profit-sharing plans), and 26 (wages (less employment credits)) of Schedule C. The new IFR allows a Schedule C filer who has yet to be approved for a PPP first- or second-draw loan in the current, $284.5 billion phase of the program to elect to calculate the owner compensation share of its payroll costs based on either net profit (as reported on line 31 of Schedule C) or gross income (as reported on line 7 of Schedule C). The SBA and Treasury have ruled that borrowers whose PPP loans already have been approved cannot increase their loan amount based on the new methodology. The interim final rule, titled “Business Loan Program Temporary Changes Paycheck Protection Program - Revisions to Loan Amount Calculation and Eligibility,” revises the maximum loan calculations for sole proprietors who file Schedule C returns, but the change is not retroactive. A revised PPP second-draw lender application form ( 2484-SD)ĪICPA leaders will discuss the SBA guidance, new forms and FAQs during an online Town Hall that will start at 3 p.m.

A revised lender application form for PPP loan guaranty ( Form 2484).New PPP first-draw ( Form 2483-C) and second-draw ( Form 2483-SD-C) borrower application forms for Schedule C filers using gross income.Updated PPP borrower first-draw ( Form 2483) and second-draw ( Form 2483-SD) application forms.The SBA also released an updated set of frequently asked questions and six updated or new application forms, as follows. The calculation change is detailed in a 32-page interim final rule published late Wednesday afternoon by the SBA, which administers the PPP in partnership with Treasury. The change opens the door for larger loans to self-employed individuals, many of whom don’t record much, if any, net profit on their Schedule C. Small Business Administration (SBA) issued new Paycheck Protection Program (PPP) rules that allow self-employed individuals who file Form 1040, Schedule C, Profit or Loss From Business, to calculate their maximum loan amount using gross income instead of net profit.

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