UPDATE from APRIL 1, 2021
The deadline to apply for PPP loans (first and second draw) has been extended to May 31st. As of March 21, there was $79 billion left in the program. Once the program runs out of money, it will be too late, so if you’re thinking about applying, you should act fast!
On February 22nd, President Biden announced a couple of changes to the Paycheck Protection Program that, simply put, are very good news for freelancers.
Freelancers and the self-employed have priority for 2 weeks
From now until March 9, the Small Business Administration will exclusively process PPP applications from businesses with fewer than 20 employees – yes, that means you solo business owners! This measure is intended to prioritize and facilitate loans to businesses that have had a hard time getting through until now.
You can apply for more money
The second piece of good news is that freelancers are now able to ask for bigger loans. Up until now, the forgivable payroll portion of a PPP loan for freelancers and sole proprietors was meant to cover 2.5 months of their NET INCOME – to do this, you needed to take the number from line 31 on your latest Schedule C, divide it by 12 and then multiply it by 2.5. This calculation will now be based on your GROSS INCOME – meaning you will start the math with the number from line 1 on your schedule C, before any deductions are taken out, which is of course a higher number.
BUT, you might want to wait a few more days to apply for your PPP loan if you want to benefit from BOTH of these positive updates. CNBC reports that even though the SBA has already started prioritizing applications, they won’t start applying the new calculation method until the first week of March. Make sure to ask your lender for the latest updates before you apply.
What else is new?
Other changes in the PPP loans application rules include:
- The elimination of an exclusionary restriction on PPP access for small business owners with prior non-fraud felony convictions.
- The elimination of PPP access restrictions on small business owners who have struggled to make student loan payments by eliminating student loan debt delinquency as a disqualifier to participating in the PPP.
- Additional access for non-citizen small business owners who are lawful U.S. residents by clarifying that they may use their Individual Taxpayer Identification Number (ITIN) to apply for the PPP instead of an SSN.
To get started, find an SBA-approved lender in your area. They’ll be able to guide you through the process.