Were you a sole proprietor, LLC or independent contractor that was not able to participate in the Paycheck Protection Program because you did not have a significant profit from your business?   If so, you might have the opportunity to access up to around $20,000 in PPP grant (forgiveness) money (up to about $30,000 if you run a restaurant).  But you may only have days to apply for these funds.

The SBA has just released a new PPP forgiveness formula that uses revenue reported on your 2019 or 2020 Schedule C (line 7) rather than net profit (line 31).  In a nutshell, you can now count your revenue as the basis for forgiveness just like employee wages (to a maximum of $100,000/yr).  Engage your accountant in the details.

Please review the scenarios in the attached PDF “Revenue-Based PPP Formula”  to see how this works in practice.

The new PPP application form and SBA FAQ document is also attached for your review.  There are other program requirements of PPP that still apply such as:

• having been in operation on February 15, 2020
• documentation of income using tax statements
• if you use revenue of more than $150,000 as your loan basis you will need to certify to the SBA that “Current economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant”.

Businesses that are taxed by the IRS as C-Corporations, S-Corporations and Partnerships are not eligible to use the gross income calculation method for calculation the PPP loan amount.  Only businesses that use Schedule C to report their income and expenses to the IRS are eligible.

It appears that these new rules are not retroactive – if you have already received a 2nd round PPP loan you cannot resubmit under these rules.  These rules should be available for anyone who has not gotten a PPP loan, or has only gotten a 1st round loan.

If you are interested, you should apply as soon as possible.  The special small business-only application period expires next Tuesday (March 9th) and the overall deadline for applications is March 31, 2021.  The new stimulus bill going through congress does not significantly increase PPP funding, except for a new program for restaurants.

Since this form was only published on March 3 the banks – where you apply – may not have updated their systems.  Applying could be a chaotic experience and you will want to research multiple options.  You may want to try and reach a customer service representative on the bank’s PPP program.  It is possible that some of the “FinTech” funders like Biz2Credit and Bluevine might be faster off the mark than local banks.

To move forward, download these PDF files… 

1. PPP Application
2. Revenue-Based PPP Foregiveness Examples
3. SBA Changes to PPP Rules