Treasury Issues New Guidance on SBA Loans for Self-Employed

April 15, 2020

Yesterday afternoon, Tuesday, April 14, 2020, the Treasury issued a new interim final rule with additional eligibility criteria and requirements for the Paycheck Protection Program (PPP) for self-employed individuals.

Here are the key takeaways:

  1. Those individuals with self-employment income who filed or will file a Form 1040 Schedule C for 2019 are generally eligible for a loan.
  2. The new guidance directs that the self-employment income of partners in a partnership may be reported as payroll costs, up to $100,000 annualized, on a PPP loan application filed by or on behalf of the partnership (or LLC filing taxes as a partnership). Individual partners may not submit a separate PPP loan application as a self-employed individual.
  3. The loan amount for self-employed individuals will be calculated based on 2019 Form 1040 Schedule C net profit. If the 2019 return has not yet been filed, the 2019 Form 1040 Schedule C must be filled out to compute the value. If the self-employed individual has employees, the self-employment income and the wages of the employees will be considered in the calculation of the loan amount in one single application.
  4. Regarding the Forgiveness Provision for individuals with self-employment income, forgiveness of owner compensation replacement for individuals with self-employment income who file a Schedule C will be calculated as eight weeks’ worth of 2019 net profit.

Aprio will provide additional updates and guidance as they become available. If you have immediate questions, please contact your Aprio Relationship Partner or contact us here.

Disclaimer for services provided relative to SBA programs and the CARES Act
Aprio’s goal is to provide the most up to date information, along with our insights and current understanding of these programs and regulations to help you navigate your business response to COVID-19.

The rules regarding SBA programs are constantly being refined and clarified by the SBA and other agencies In certain instances, the guidance being provided by the agencies and/or the financial institutions is in direct conflict with other competing guidance, regulations and/or existing laws.

Due to the evolving nature of the situation and the lack of final published rules, Aprio cannot guarantee that additional changes or updates won’t be needed or forthcoming and the original advice given by Aprio may be affected by the evolving nature of the situation.

You need to evaluate and draw your own conclusions and determine your Company’s best approach relative to participation within these programs based on your Company’s specific circumstances, cash flow forecast and business strategy.

In situations where resources are provided by third parties, those services should be covered under a separate agreement directly with that service provider. Aprio is not responsible for the actions of any other third party.

Aprio encourages you to contact your legal counsel to address the legal implications of the impact of the CARES Act and specifically your participation in any of the SBA programs.

Recent Articles

About the Author

Tommy Lee

Tommy is the partner-in-charge of Aprio's Retail, Franchise and Hospitality group. His practice focuses on small and mid-sized retail, franchise and hospitality companies and real estate firms. Tommy has expertise in corporate structuring arrangements, multi-state and international tax planning, and corporate and individual tax mitigation.