PPP Loan Eligibility as a Sole Proprietor

[Midwest Contractor]

What is the PPP eligibility for a sole proprietor with no employees and who does not pay himself a salary (payroll)? If your Schedule C shows a loss, then you are not eligible, correct? Or did that change with the recent changes to the PPP application process?

Lots of independent contractors who are hurting in my area never took PPP loans last year because of the onerous requirement of needing a payroll history. These guys are too small to afford paying payroll taxes, much less hire someone to manage the reams of employment paperwork that a single person can generate every year. Yet they have to put food in their kids' tummies and pay doctor bills like everyone else.

Also, regarding the carve out for sole proprietors who can take out a PPP loan for 2.5 months of the net profit shown on their Schedule C with a cap of $100,000 for the year. That comes out to $20,833.33. What if they never made a profit the previous year? Does the new policy change this?

 

[doucar]

Depends upon the laws of your unnamed state.

 

[Zigner]

Depends upon the laws of your unnamed state.

PPP is federal.

 

[LdiJ]

PPP is federal.

Yep, purely federal. No state component at all.

 

[FlyingRon]

https://www.sba.gov/funding-programs/loans/coronavirus-relief-options/paycheck-protection-program

A sole proprietorship is not disqualified.

 

[Midwest Contractor]

I am a sole proprietor (no payroll) who was ineligible for PPP last year because Line 31 of my Schedule C showed zero profit. Yet I still have all the costs of any other contractor who has a payroll. The new "changes" to PPP were supposed to address those sole proprietors who were not eligible, like myself.

Just wondering if the supposed changes rectified the onerous Line 31 requirement for sole proprietors, of if these "changes" to the formula by the Biden Administration were just window dressing.

For a limited 14-day special enrollment period you would think most large banks, the Treasury Department or the SBA would have clarified what these supposed "changes" are, but as of yet I can't find anything.

 

[quincy]

I am a sole proprietor (no payroll) who was ineligible for PPP last year because Line 31 of my Schedule C showed zero profit. Yet I still have all the costs of any other contractor who has a payroll. The new "changes" to PPP were supposed to address those sole proprietors who were not eligible, like myself.

Just wondering if the supposed changes rectified the onerous Line 31 requirement for sole proprietors, of if these "changes" to the formula by the Biden Administration were just window dressing.

For a limited 14-day special enrollment period you would think most large banks, the Treasury Department or the SBA would have clarified what these supposed "changes" are, but as of yet I can't find anything.

The PPP loan was modified for small businesses and nonprofits with fewer than 20 employees. One modification allows you to use the gross income line on your Schedule C tax form for the loan amount formula.

I believe the application process starts today for you - but the changes won't take effect until the first week of March.

 

[Midwest Contractor]

The PPP loan was modified for small businesses and nonprofits with fewer than 20 employees. One modification allows you to use the gross income line on your Schedule C tax form for the loan amount formula.

I believe the application process starts today for you - but the changes won't take effect until the first week of March.

Thank you, I saw a headline about this the day after I posted this thread.

My main question is if you file a personal tax return, are you limited to the gross on your Schedule C or can you add the gross from your Schedule E as well? Or maybe it's one or the other. I mean, it all ends up on the front page anyways.

My only other question would be whether the "cap" has been raised from $100,000 for the year or if they left it the same. I guess I will have to call my banker who had to deny my PPP application last year to get further clarification.

Thank you all.

 

[quincy]

Thank you, I saw a headline about this the day after I posted this thread.

My main question is if you file a personal tax return, are you limited to the gross on your Schedule C or can you add the gross from your Schedule E as well? Or maybe it's one or the other. I mean, it all ends up on the front page anyways.

My only other question would be whether the "cap" has been raised from $100,000 for the year or if they left it the same. I guess I will have to call my banker who had to deny my PPP application last year to get further clarification.

Thank you all.

More information is supposed to be published about the changes. Calling your banker would be smart.

Good luck.