self employed? The following is how you can also apply for a PPP loan.

self employed? The following is how you can also apply for a PPP loan.

self employed? The following is how you can also apply for a PPP loan.

Don’t let the “salary” in your name fool you into thinking that you are not eligible for this forgivable loan. In fact, since you don’t have the number of employees, payroll, and benefits to calculate, your application process (loan and subsequent forgiveness) should be much simpler.

As of December 27, 2020, Congress has approved additional funding for PPP. Fundbox no longer accepts PPP applications, but SBA can help you find PPP lenders.

Even as a sole proprietor, PPP loans can provide you with funds equivalent to the total income 2.5 months before the pandemic (or 3.5 months if your business is engaged in the food service or accommodation industry)-based on 2019 Comparison period (or the first 2.5 months of 2020 (if your business started in 2020).

You can also use part of this loan to pay for some Operating expenses For your business (such as business-related rent, utility bills or interest payments on mortgages or other commercial loans, and certain business-related supplies or repairs).However, if you want Eligible for loan relief, These operating expenses can only account for up to 40% of your total loan.

How much can you expect to borrow?

For most independent contractors, calculating your PPP loan limit is a three-step process:

  • Find line 7 (Total income) on your 2019 IRS Form 1040, Schedule C (if you have not submitted 2019, please continue to fill it out). If the amount in line 7 exceeds 100,000 USD, please fill in 100,000 USD. As of March 8, 2021, most lenders will now accept line 7 (total income instead of line 31, net income as previously required).
  • If line 7 shows $0 or less, you are not eligible for a PPP loan.
  • Divide the amount from step 1 by 12.
  • Multiply the amount from step 2 by 2.5 (if your business is in the food service or lodging industry, multiply by 3.5, and the NAICS code starts with 72). For most borrowers, this will be your maximum PPP loan amount.
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    Note: If you receive an EIDL loan between January 31, 2020 and April 3, 2020, you can refinance it as part of the PPP loan (minus any amount received as an EIDL grant).

    Here is how you can use PPP loans

    • Change your salary (based on your income in 2019 or 2020)
    • Pay a mortgage or loan (e.g. car Loan) you use to conduct business*
    • Pay commercial rent*
    • Pay for commercial utilities*
    • Pay interest on any other debts incurred before February 15, 2020 (but such amounts are not eligible for loan relief)
    • Operating expenses for business software and cloud computing services, and other human resources and accounting requirements that facilitate business operations
    • According to the contract or purchase order in force before the payment of the PPP loan, payment to the supplier for goods essential to the operation of the borrower or payment related to perishable goods
    • Property damage costs related to robbery caused by public riots in 2020 are not covered by insurance or other compensation

    *You must have applied for the 2019 or 2020 tax deduction for the fees described in 2, 3 and 4 above.

    This is the information you need to apply for a PPP loan

    If your lender is accepting PPP applications, the following documents are required. Please note that specific requirements and acceptable documents may vary by lender. The SBA may issue further guidance, and these recommendations will be updated at that time.

    1. Complete PPP application form

    • There is one application form for the first PPP loan, and a different application form for the second PPP loan.
    • Include your contact name and email address.
    • Describe your business type (document requirements for independent contractors and sole proprietors are slightly different).
    • Check yes or no for all questions on the form.
      • If your answer to questions 1, 2, 5 or 6 is yes, you are not eligible for a PPP loan.
      • If you answered “yes” to questions 3 or 4, you may still be eligible, but you must attach an appendix to a separate form explaining the details.
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    2. Proof of own income

    For independent contractors/self-employed/sole proprietorships without employees:

    • 2019 or 2020 IRS Form 1040 Schedule C. (If you use the year 2020 to calculate the loan amount, but you have not yet submitted the 2020 tax, you can provide a draft.
    • If you are a sole proprietor of multiple companies, please consider bundling the income documents of all your companies together and apply using a single PPP form to avoid separate applications from being marked as duplicates under your social security number. (Please consult your own legal, financial and accounting consultants to determine how to proceed.)
    • If you include the Economic Injury Disaster Loan (EIDL) obtained between 1/31/20-4/3/20, please provide a bank statement showing the deposit to your business account.
    • Covers invoices, bank statements, record books or 1099 MISC as of February 15, 2020.
    • Remember: As a sole proprietor, your PPP application will not involve payroll accounting.

    3. Unexpired government-issued photo ID

    In addition to your SSN, the lender also needs a government-issued ID, such as a passport or a driver’s license issued by the state government.

    4. Void Checks

    Therefore, the lender can deposit approved funds into your account, and you may be asked to provide a voided check.

    5. Income reduction by 25%. Documents required to prove (the second PPP draw)

    If you have received and used up your first PPP loan, you may now be eligible for a second PPP withdrawal. You do not need to be forgiven for your first PPP loan (with few exceptions). In addition to the documents listed above, you also need one of the following (your choices) to prove that your income has decreased:

    • Tax forms for 2019 and 2020 (IRS Form 1040, Schedule Cs).
    • 2019 and 2020 quarterly income statement (the same quarter in 2019 and 2020)
    • If the business starts between January 1, 2020 and February 15, 2020, compared with Q1, the quarterly income statement or bank statement of Q2, Q3 or Q4.
    • Bank statements for 2019 and 2020 (same quarter for 2019 and 2020).
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    Who can apply?

    As a sole proprietor or independent contractor, you may be eligible for a PPP loan if all of the following conditions are met:

  • you already It will start operations on February 15, 2020. (With very few exceptions, you cannot start a business in March or April of this year and expect to receive PPP funding.)
  • yours Principal residence is the United States. (You do not have to be a U.S. citizen);
  • your business Submitted 2019 or 2020 tax return With the Internal Revenue Service. For independent contractors, this means Schedule C of Form 1040 for 2019 or 2020, showing self-employment income.
  • Entities with significant ties to China are not eligible for the second PPP loan withdrawn.
  • In addition, to qualify, you must prove in good faith Loans are “necessary support” [your] Operation in progress.“(In other words, a PPP loan should be the only way you can get the funds you need.)
  • What if you are not eligible for 100% forgiveness?

    The unforgiven amount only needs to be converted into a 1% interest loan, Pay within the next two years. There is even a grace period. No payment is required until SBA remits the waived amount to your lender. If you do not ask for forgiveness, you will not have to pay any payments for 10 months After the loan is issued. (However, interest will still be calculated from the date the loan is issued.)

    Learn more

    For more information about PPP loans, please visit American Chamber of Commerce website.

    Disclaimer: This information is aggregated from external sources. Fundbox and its affiliates do not provide financial, legal or accounting advice. This content is for reference only and is not intended to provide and should not be used as a basis for financial, legal or accounting advice. You should consult your financial, legal or accounting advisers before making any transactions.

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