InfoBytes Blog
SBA provides additional guidance on PPP loans for self-employed, independent contractors
On April 14, the Small Business Administration (SBA) released an interim final rule to supplement the first Paycheck Protection Program (PPP) Interim Final Rule issued April 2 (covered by InfoBytes here). This interim final rule provides additional guidance for filers of IRS Form 1040 Schedule C (individuals with self-employment income), information concerning eligibility issues for certain business concerns, and requirements for certain pledges of PPP loans. Specifically, self-employed individuals who filed Schedule C—such as independent contractors or sole proprietors in operation on February 15, 2020—are eligible for PPP loans, provided they meet specific criteria. The interim final rule provides instructions for calculating maximum loan amounts and states that self-employed loan recipients may use the proceeds for, among other things, owner compensation replacement, mortgage interest payments, and interest payments on debt obligations incurred prior to February 15, 2020. Details and clarification on restrictions, PPP loan forgiveness eligibility, and the types of permitted eligible businesses are also included.
The interim final rule takes effect upon publication in the Federal Register and applies to PPP applications submitted through June 30, 2020, or until funds designated for this purpose are exhausted. The SBA will also accept comments on the interim final rule for 30 days following publication.