PPP Covid-19 Relief Program Is Adjusted to Help the Smallest Businesses in the USA

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Important revisions are made to boost participation among sole proprietors, independent contractors, self-employed “gig-workers,” and solo entrepreneurs in minority communities.

For qualifying businesses, this is money that can be used to meet payroll and other business expenses and new deadlines to apply are approaching quickly. Small businesses and non-profits with fewer than 20 employees and sole proprietors can apply for second draw PPP loans through March 9, 2021.

The PPP program remains open to all eligible entities from March 10 through March 31, 2021.

The Paycheck Protection Program (PPP) was first established by the CARES act to provide forgivable loans to small businesses impacted by coronavirus shutdowns.

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Maggie Ference, senior vice president and Small Business Administration director at Huntington National Bank, said the PPP program is not a “normal loan process.”

“There are no guarantors,” Ference said. “There is not an expectation for collateral support. There is no analysis for capacity for repayment. Don’t be concerned with your credit score heading into this opportunity.”

Applicants don’t need a business relationship with a bank to get started, she also said. Business payroll dictates the loan amount, but funds can also be used for other reasons — mortgages, rent, utilities and other operational expenses.

Said Ference: “This is a truly once-in-a-lifetime opportunity to get access to these funds.”

Reaching more of the smallest borrowers could require changes that go beyond tweaking PPP’s loan formula.

Some solo entrepreneurs in minority communities “don’t know how to navigate through the waters of these loans,” said Robben Washington, an adviser to the board of the 52nd Street Vendors Association in West Philadelphia. “They don’t trust random people calling and trying to help.”

PPP borrowers can use gross income, SBA rules
The U.S. Small Business Administration (SBA) issued new Paycheck Protection Program (PPP) rules that allow self-employed individuals who file Form 1040, Schedule C, Profit or Loss From Business, to calculate their maximum loan amount using gross income instead of net profit.

The change opens the door for larger loans to self-employed individuals, many of whom don’t record much, if any, net profit on their Schedule C.

The calculation change is detailed in a 32-page interim final rule published late Wednesday afternoon by the SBA, which administers the PPP in partnership with Treasury.
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Business Loan Program Temporary Changes; Paycheck Protection Program –
Revisions to Loan Amount Calculation and Eligibility
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Paycheck Protection Program Loans – Frequently Asked Questions (FAQs)
The FAQs have been updated to reflect changes made by the Economic Aid to Hard-Hit
Small Businesses, Nonprofits, and Venues Act enacted on December 27, 2020. The FAQs
are in the process of being revised to reflect changes made by the Interim Final Rule on
Revisions to Loan Amount Calculation and Eligibility posted on SBA’s website on March
3, 2021.
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Paycheck Protection Program
Borrower Application Form for Schedule C Filers Using Gross Income
March 3, 2021
Note: an applicant may use this form only if the applicant files an IRS Form 1040, Schedule C and uses Gross Income to Calculate PPP Loan Amount
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Paycheck Protection Program
Second Draw Borrower Application Form for Schedule C Filers Using Gross Income
March 3, 2021
Note: an applicant may use this form only if the applicant files an IRS Form 1040, Schedule C and uses Gross Income to Calculate PPP Loan Amount
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SBA Coronavirus (COVID-19): Small Business Guidance & Loan Resources
SBA also announced four additional changes to open the PPP to more underserved small businesses than ever before. While these changes are being implemented, SBA will work with community partners to improve the emergency relief “digital front door” and conduct extensive stakeholder outreach. And, SBA will strengthen its relationships with lender partners to advance equity goals, deliver funding efficiently, and prevent fraud, waste, and abuse.

SBA will:
– Allow sole proprietors, independent contractors, and self-employed individuals to receive more financial support by revising the PPP’s funding formula for these categories of applicants;
– Eliminate an exclusionary restriction on PPP access for small business owners with prior non-fraud felony convictions, consistent with a bipartisan congressional proposal;
– Eliminate 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; and
– Ensure access for non-citizen small business owners who are lawful U.S. residents by clarifying that they may use Individual Taxpayer Identification Number (ITIN) to apply for the PPP.
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PPP COVID-19 relief initiative is adjusted to attract the smallest businesses
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New rules for self-employed and gig workers applying for PPP loans are out. Here’s what you need to know
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