skip to main content
X

WELCOME CAPITAL REGION VISITORS

PPP LOAN FORGIVENESS ON YOUR MIND?

Count on us as you travel the road to recovery.

SBA ISSUES PPP GUIDANCE ON SCHEDULE C FILERS

Following up on President Biden’s directive to increase availability of Paycheck Protection Program (PPP) funds to small businesses, the SBA has issued guidance potentially increasing the amount a taxpayer with a Schedule C will be able to borrow.

Previously the amount of the loan for Schedule C borrowers was based on the net income of the Schedule C. Many small businesses that operate as Schedule Cs were either eligible for small loans or were not eligible for a loan because the expenses during the year were greater than the income.

Under the new rules, Schedule C borrowers can compute the amount of their loan based on their gross income or net income. Subject to the applicable loan caps, the loan amount is computed as follows:

  • For Schedule C without employees
    • Gross income or net income, capped at $100,000, divided by 12 then multiplied by 2.5 (3.5 for second draw borrowers with NAICS codes starting with 72). Thus, the maximum amount of the loan is $20,833
  • For Schedule C with employees
    • Gross income minus payroll costs (wages, health, retirement plan) or net income, capped at $100,000, plus
    • Payroll cost (wages, health, retirement plan) subject to the $100,000 per employee limitation
    • Total of the two items above is divided by 12, then multiplied by 2.5 (3.5 for second draw borrowers with NAICS codes starting with 72).

While the above changes are welcome news for Schedule C borrowers, the changes are only effective on a prospective basis. Therefore, if the borrowers that have received a PPP loan based on their net income, at this point there is not an opportunity to re-file their PPP loan application to obtain a higher amount based on the new gross income rules.

Contact us to find out how UHY can help you navigate this new guidance.

HAVE A QUESTION?

Please complete this form to hear from one of our professionals.

 

Hide Firm Disclaimer

©2021 UHY LLP. ALL RIGHTS RESERVED.

UHY LLP is a licensed independent CPA firm that performs attest services in an alternative practice structure with UHY Advisors, Inc. and its subsidiary entities. UHY Advisors, Inc. provides tax and business consulting services through wholly owned subsidiary entities that operate under the name of "UHY Advisors." UHY Advisors, Inc. and its subsidiary entities are not licensed CPA firms. UHY LLP and UHY Advisors, Inc. are U.S. members of Urbach Hacker Young International Limited, a UK company, and form part of the international UHY network of legally independent accounting and consulting firms. "UHY" is the brand name for the UHY international network. Any services described herein are provided by UHY LLP and/or UHY Advisors (as the case may be) and not by UHY or any other member firm of UHY. Neither UHY nor any member of UHY has any liability for services provided by other members.

On this website, (i) the term "our firm", "we" and terms of similar import, denote the alternative practice structure conducted by UHY LLP and UHY Advisors, Inc. and its subsidiary entities, and (ii) the term "UHYI" denotes the UHY international network, in each case as more fully described in the preceding paragraph.