As mentioned above, eight weeks of your loan proceeds are considered a salary replacement. When you applied for your PPP loan, you needed proof of salary, in this case a salary. To do this, you will need your 2019 Schedule C Form 1040, as well as a 2019 IRS 1099-MISC form that includes non-employee compensation, invoices, bank statements, or a book of records proving that you are self-employed. Like any other small business that takes out a PPP loan, the self-employed will return to their lender when it`s time to get a PPP loan forgiveness. If you`re having trouble calculating this, Intuit has a great forgiveness calculator called AidAssist that you can use. At this point, you will not be eligible for a full loan forgiveness if you apply for it if you are using an 8-week covered period. Assuming you don`t have any other expenses eligible for the rebate and you have taken out the maximum PPP loan you have, you have 25% of the total proceeds of your loan that is not forgiven. Example 2: River earned $75,000 in 2019. Divided by 12, his average monthly income was $6,250. Multiply that by 2.5, and River`s loan forgiveness amount is $15,625. If you are a sole proprietor, independent contractor or self-employed person who did not have employees at the time of the PPP loan application and did not include employee salaries in your loan application, your “salary costs” replace the owner`s remuneration: If you do not make a paycheck, the amount of your PPP loan will be calculated based on your gross or net income, as set out in Appendix C for 2019 or 2020. If you`ve applied for a PPP loan, you`re probably familiar with the loan terms and conditions.

However, since these conditions have been updated due to the PPP Flexibility Act, it is worth reviewing them. If you cannot claim 100% of your loan as an OCR or OCS and you do not have any eligible business expenses for which you can use PPP funds, the remaining balance of the loan must be repaid in accordance with the terms of the PPP loan. At 1% interest for 5 years, this is one of the best loan terms you can find, but there is no prepayment penalty if you want to pay everything back sooner. This calculator estimates forgiveness for self-employed individuals who submit Schedule C and do not have employees. The next step is the same as the 3508S and just as important. You must confirm that you have completed the loan remittance form accurately and honestly by initializing each paragraph. Making a false statement, for example, to deceive the Treasury or the SBA in order to obtain a higher loan amount is legally and financially dangerous. Fines and even prison sentences are possible. Safe Harbor ETPs 2: Borrowers will not receive forgiveness rebates if a) they have reduced their FTEs during the period from 15.02.20 to 26.04.20; and (b) they have returned ftEs to the same level as the processing period covering 15.02.20 at the latest on the date prior to the date of application or 31.12.20. See also: Are there upper limits for the amount of credit forgiveness that are available for homeowners` and self-employed employees` own wage compensation? The good news is that solopreneurs who took out the maximum loan amount, which was 2.5 times their average monthly income, will receive a full credit rebate if they qualify. Qualification occurs when you meet these four requirements: Treasury Department guidelines state that you have claimed (or are eligible) a deduction for such expenses on your Form 1040 2019 Schedule C so that they are considered for remission.

One of the biggest questions related to the use of PPP loans for the self-employed is whether they can use 100% of their PPP loan as a substitute for the owner`s remuneration. The calculation you need to make for this form is as follows: 1.) The number of full-time employees at the time of the loan, 2.) the number of full-time employees at the time of the remittance application, and 3.) Your total payroll for the pardon period. This will help you determine your “potential amounts of forgiveness.” Filling out Form 3508 takes longer, but it`s still simple. Like the other two forms, it begins with a recitation of the details of the business and the loan. Then go into the calculations: list your wage and non-wage costs and list the RTD reductions. (Appendix A and its worksheet will help you specify and calculate these numbers.) Track the total eligible costs incurred and paid during the period covered after the loan is financed For non-payment costs, you are entitled to a rebate of: You can also apply for a rebate directly from your lender. You will need to complete one of three forms: Form 3508S, Form 3508 or the ZE application. But which shape is best for you? Well, of course, you`d probably prefer the name-only EZ app, right? In addition, you will also need to fill out an official PPP loan forgiveness application form. Self-employed individuals without employees can complete Form SBA 3508EZ, which is an abbreviated and simplified version of the complete PPP pardon application. Your lender may have a digital version of the form that you can also fill out.

To say that the tens of millions of freelancers, independent entrepreneurs and independent small business owners in the country should be able to use this loan product would be a huge understatement. The Covid pandemic has changed everything as self-employment income has dried up and many small business owners have struggled powerfully. If the replacement amount of your homeowner`s indemnity exceeds the amount of your PPP loan, simply enter this amount in “Salary Costs” and you will be entitled to a full remission of your PPP loan. For self-employed individuals who have multiple businesses with PPP loans, you are capped at $20,833 as owner compensation for all loans received from all businesses. For example, if you receive $15,000 in business owner`s compensation, you can only receive $5,833 in compensation from all the other corporations in which you have an interest. And yet, despite all this initial bad news, once the loan program gained traction, the problems were resolved, changes were made, and eligibility increased. For us, the best of these changes was that subsequent cycles of PPP funding allowed the self-employed to participate in support, although many do not have an actual “payroll” per se. In many ways, the self-employed have struggled to access and use Paycheque Protection Program loans than other small businesses. From the application process to the remittance guidelines, the self-employed have tried to understand how this forgivable loan program works for them. This third step calculates your average monthly income and the fourth step gives you your maximum PPP loan forgiveness amount – 2.5 times your monthly average. At $100,000, that figure is $20,833.

The form specifically includes a calculation table that helps determine how to adjust the amount of the credit remittance accordingly. Almost always, an employer has registered with FTEs, so the form itself would not apply to the self-employed. See also: What documents must borrowers who are self-income individuals who complete Form 1040, Schedule C or F submit to their lender with their loan forgiveness application? Typically, lenders need up to 60 days to evaluate the credit remittance. To what extent were these people legitimate borrowers? How were they eligible to receive PPP loan funds? Talk about rubbing salt in the wound. The PPP limits compensation to an annual salary of $100,000. Therefore, for sole proprietors or independent contractors without employees, the maximum possible PPP loan is $20,833, and the total amount is automatically eligible as a portion of the owner`s compensation for the rebate. The owner`s compensation part allows you to claim a discount for the 2.5-month gross profit without having to spend it on anything. .