Breaking News: New PPP for the Self-Employed and Small Businesses

Big Deal 1

To reserve Paycheck Protection Program (PPP) monies for you, the Small Business Administration (SBA) established a 14-day exclusive application period for small businesses with fewer than 20 employees.

The window closes on March 9 at 5:00 p.m. Eastern time, so if you are an S or C corporation with fewer than 20 employees, apply for your first, second, or upgrade PPP money now.

Also, don’t apply just to your bank. You may find your bank useless, but start there anyway. And then apply to one of the online referrals such as Nav or Lendio, with which we and other members (subscribers) have had success.

Take the money from the first lender willing to give it to you. Forget the laggards.

Big Deal 2

The SBA is creating a new application for the Schedule C business that will use gross income rather than net profit to determine the money amount of the PPP. We don’t yet have that SBA form, an SBA FAQ, or one of the infamous SBA interim final rules.

What to do? Wait until the new form is available (it could be today or tomorrow). Why wait? Because the new SBA form will give you more tax-free money.

Example. Sue is self-employed with no employees. Her gross income on line 7 of her Schedule C is $130,000. Her net income on line 31 is $72,000.

If Sue applies today before the new form is available, she will receive approval for $15,000 of tax-free money ($72,000 ÷ 12 x 2.5).

If Sue waits for the new form, which should arrive within days if not minutes, she will use the lesser of her gross income of $130,000 or the ceiling of $100,000 for the PPP application. She will receive $20,833 in tax-free money ($100,000 ÷ 12 x 2.5).

By waiting for a day or two, Sue receives an extra $5,833 in tax-free money ($20,833 – $15,000).

Partners

Partners are self-employed, but the SBA has said nothing about partners. Perhaps when we see the guidance, we will have something to report.

Updates

We are on the lookout for SBA guidance and will update this article as we find the new rules and forms.

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