Paycheck Protection Program: Guidance for Self-Employed Individuals and Partners

By Keiter CPAs

Paycheck Protection Program: Guidance for Self-Employed Individuals and Partners

SBA PPP Loan Forgiveness Rules

The Paycheck Protection Program (PPP) is a loan designed to provide a direct incentive for small businesses negatively impacted by COVID-19 to keep their workers on the payroll. On April 14, 2020, the Small Business Administration (SBA) released an additional Interim Final Rule (“the Rule”) that provides guidance on a couple of key areas of uncertainty around the PPP.

SBA Releases Additional Guidance Regarding Paycheck Protection Program

Section III(1)(a) provides guidance as to which self-employed individuals, filing Schedule C of Form 1040, are eligible for loans and loan forgiveness under the PPP. In order to be eligible for a loan under the program, the self-employed business must have been in operation on February 15, 2020.

Has Your Business Received a PPP Loan?

This section also provides that if you are a partner in a partnership, you are not allowed to file a separate application for a loan under the PPP. Instead, the partnership is the entity that is eligible for loans and loan forgiveness under the PPP. This section of the guidance provides that the partnership may use the self-employed income of general, active may be reported as a payroll cost, up to $100,000 annualized. This guidance applies as well to LLCs taxed as partnerships.

Section III(1)b) of the Interim Final Rule provides detailed examples as to how a self-employed individual filing Schedule C makes the calculation to determine the amount that can be borrowed under the PPP. Examples are provided for a self-employed individual with and without employees. This section also provides guidance as to the type of documentation the self-employed individuals must provide with the loan application, including documentation that the self-employed business was in operation on February 15, 2020.

Under section III(1)(d) of the Rule, guidance is provided as to how the loan proceeds may be used by eligible self-employed individuals.

Interim final rule section III(1)(e) and (f) provide that 75 percent of the PPP loan proceeds must be used for payroll costs including qualifying owner replacement compensation.

Read the full guidance.

If you have questions about how these changes impact your unique business situation, please contact your Keiter advisorEmail or Call: 804-747-0000. We are here to listen and provide sound advice.

Disclaimer:  This content has been prepared for general guidance and informational purposes only based on the date published.
The FFCRA, CARES Act, and SBA Paycheck Protection Program (PPP) are continually releasing new guidance that may change the information provided within this content. Keiter recommends that you perform your own independent research and/or speak with a qualified accounting professional before making any financial business decisions. © 2021 Keiter, All Rights Reserved.

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Keiter CPAs

Keiter CPAs

Keiter CPAs is a certified public accounting firm serving the audittax, accounting and consulting needs of businesses and their owners located in Richmond and across Virginia. We focus on serving emerging growth businesses and companies in the financial servicesconstructionreal estatemanufacturingretail & distribution industries and nonprofits. We also provide business valuations and forensic accounting servicesfamily office services, and inbound international services.

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The information contained within this article is provided for informational purposes only and is current as of the date published. Online readers are advised not to act upon this information without seeking the service of a professional accountant, as this article is not a substitute for obtaining accounting, tax, or financial advice from a professional accountant.


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