![]() ![]() You must provide the 2019 or 2020 (whichever you used to calculate loan amount) Form 1040 Schedule C with your PPP loan application to substantiate the amount for which you applied. How to Substantiate Your Income (Self-Employed No Employees) This is the amount most self employed borrowers with no employees will use to qualify for a first-time PPP loan. Step 3: Multiply the average monthly net profit or gross income amount from Step 2 by 2.5. Step 2: Calculate the average monthly net profit or gross income amount (divide the amount from Step 1 by 12). If both your net profit and gross income are zero or less, you are not eligible for a PPP loan. (If you are using 2020 to calculate payroll costs and have not yet filed a 2020 return, fill it out and compute the value.) If this amount is over $100,000, reduce it to $100,000. Step 1: From your 2019 or 2020 IRS Form 1040, Schedule C, you may elect to use either your line 31 net profit amount or your line 7 gross income amount. If you have no employees, use the following methodology to calculate your maximum loan amount: If you are self-employed and have no employees, the SBA provides the following instructions in the Mafor new PPP loan borrowers: First Draw PPP Loan If You Have No Employees Note: Do not include payments you make to 1099 contractors in your payroll. (If you have already applied for PPP using net profit, see the FAQ below: Can I Request More Money If I Used Net Profit?) The new calculation provides more flexibility, allowing borrowers to use net profit or gross income. Prior to this change, self-employed borrowers who file Schedule C used line 31 of their Schedule C (net profit) to calculate the owner’s compensation portion of their loan amount. Update: On Mathe SBA released a new Interim Final Rule that applies to PPP applicants who are self-employed.
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