Earlier this week, the SBA and Treasury issued new PPP Forgiveness guidance and new versions of the forgiveness application (including an EZ version) to take into account the Paycheck Protection Program Flexibility Act (Flexibility Act) that was signed into law on June 5th.
The Guidance is great for the Independent Contractors, Freelancers, and those who are self-employed. According to the Treasury, they have “determined that it is appropriate to limit the forgiveness of owner compensation replacement for individuals with self-employment income who file a Schedule C or F to either eight weeks’ worth (8/52) of 2019 net profit (up to $15,385) for an eight-week covered period or 2.5 months’ worth (2.5/12) of 2019 net profit (up to $20,833) for a 24-week covered period per owner in total across all businesses.” This means that if you do not have a lot of covered expenses like rent, business mortgage interest, or utilities, you opt for the extended covered period of 24 weeks (instead of the original 8) and will most likely receive full forgiveness.
The new PPP EZ Forgiveness Application applies to borrowers who fit one of the criteria below:
- Kept their employees wages within 25% of their pre-COVID-19 level and did not reduce the hours of their employees between January 1, 2020 and the end of the Covered Period.
- Kept their employees wages within 25% of their pre-COVID-19 level and the borrower was “unable to operate during the Covered Period at the same level of business activity as before February 15, 2020, due to compliance with requirements established or guidance issued between March 1, 2020 and December 31, 2020.
- Self-Employed, Independent Contractors, Freelancers, and any other business with no employees.
For some more details on these new rules, you can check out this great Forbes article from Brian Thompson
If you have not yet applied for the PPP due to fears that you might not qualify for forgiveness, now might be a great time to do so as you only have until June 30th to apply, and there is still over $100 billion in PPP funds available. Before you do apply for the PPP, though, if your Indiana small business has been severely negatively impacted by the COVID-19 pandemic to the tune of 40% month over month loss, you can qualify for the Indiana Small Business Restart fund. This fund will grant your business up to $10,000 depending on the revenue losses you incurred. You are eligible if your business:
- Is registered to operate in Indiana
- Had less than 50 employees at of 12/31/2019
- Had less than $5 million in revenue in 2019
- Was profitable in 2019
- Can demonstrate a monthly revenue loss of at least 40% compared to pre-COVID-19 revenues
- Did not have used funding from the Paycheck Protection Program (PPP), Economic Injury Disaster Loan (EIDL), or Community Development Block Grant (CDBG)
Also note that on Monday of this week, the SBA reopened the Economic Injury Disaster Loan Emergency Advance program to all eligible borrowers. This is another great opportunity for small businesses, independent contractors, and self-employed individuals to try and recoup some losses experienced due to the COVID-19 shutdown.
Disclaimer: As always, please know that we operate a Coworking space for independent contractors, freelancers, the self-employed and remote workers, we are definitely not CPA’s, so anything you see on our blog is just for your information and should not be considered advice as we do not know your specific needs or issues. Please consult your CPA or Advisor.