PPP Changes Announced by SBA Last week the SBA released a new rule which clarified the forgivable portion of the PPP Loan. For independent contractors and sole proprietors without employees, PPP loan forgiveness is now limited to a proportionate eight-week share of the borrower’s 2019 net profit, which would be reflected in the individual’s 2019 Form 1040 Schedule C. In other words, if that individual wants 100% forgiveness for their PPP loan, they will need to limit their loan request to 8 times their average weekly net profit (rather than 2.5 times their average monthly net profit). Though independent contractors and sole proprietors may still request a loan amount up to 2.5 times their average monthly profit as set forth in the CARES Act, loan proceeds above 8 times their average weekly income may not be forgivable and will be treated as a conventional loan which must be repaid. Click Here for NAR’s Updated SBA Loan FAQ EIDL Changes Announced by SBA Last week the SBA announced a change to how it will administer EIDLs and the advance grants. In order to meet the high demand and provide funds to the greatest number of applicants, the SBA is now conditioning advance grant amounts on employee numbers – $1,000 per employee, capped at $10,000. In addition, some SBA loan counselors have advised applicants that the EIDL is being capped at $15,000 per business, bringing the total maximum amount to $25,000. While NAR understands the SBA’s goals in reducing the loan and grant amounts, we are concerned that this dramatic change in the implementation of the programs will reduce their usefulness for many small businesses and disproportionately impact independent contractors who do not have employees. NAR has expressed these concerns to Congress (see above) and urged them to provide additional funding to the SBA loan programs in future COVID-19 relief bills in order to ensure that the programs can provide adequate funding and assistance to businesses in need during the crisis. Click Here for NAR’s Updated SBA Loan FAQ
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