By Kathy Bazan, BRC Consultant
If you are self-employed, an independent contractor, a consultant, or a business owner with fewer than 20 employees, use these new forms from the SBA on March 3, 2021:
- New PPP first-draw (Form 2483-C)
- New PPP second-draw (Form 2483-SD-C)
These are the borrower application forms for Schedule C filers using gross income.
While some lenders will use these forms, there are banks and credit unions which may create their own forms based on these SBA forms.
Does this create a problem for those applying for a PPP?
Very possibly.
According to an article published March 5 in the American Institute of Certified Public Accountants, “…the changes mandated by the new IFR are significant enough that lenders won’t be able to implement them into their PPP portals for at least a week” which is March 10.
The problem is that the window in which only these microbusinesses can apply ends March 9.
On the 10th., any business can apply; the concern is that these micro businesses might not get all the attention from lenders they are receiving while the window is open.
How did we get here?
Timeline:
March 2020:
President Trump signs the CARES Act. Paycheck Protection Program opens. Formula for calculating the loan is based on payroll and net income from 2019.
December 27, 2020:
President Trump signs into law changes to the PPP program. Now, small farmers and ranchers can use their 2019 gross income (income BEFORE expenses are paid) to qualify for the First Draw PPP and Second Draw PPP. The change is retroactive to any PPP previously approved for small farmers and ranchers.
February 22, 2021:
President Biden extends the new farmer and rancher PPP loan calculation formula to microbusinesses including the self-employed, sole proprietors, and independent contractors. These business owners can now use their 2019 gross income.
This change means the SBA needs to create new application forms.
President Biden asks the SBA to make these changes retroactive to recalculate any PPP loans already approved.
A window in which only these microbusinesses can apply opens February 24 and closes March 9.
March 3, 2021:
SBA releases the new PPP application forms focusing on gross income.
SBA rules that there will be no retroactive recalculation of previously awarded PPP loans to any microbusiness. What was extended by law to small farmers and ranchers will not be extended to microbusinesses.
March 9, 2021:
Application window for microbusinesses closes.
March 10, 2021:
Lenders may have the new application forms uploaded to their portals so microbusinesses can apply. (This is a projection and NOT a promised date.)
Suggestion:
- Use the SBA form to calculate your PPP loan amount.
- Call your lender and find out when their new application based on gross income goes live.
- Work with your lender to get your application in ASAP.
- If you have questions, contact me brcconsultant@tualatinchamber.com.
Kathy Bazan, BRC Consultant to Business Owners
BRCConsultant@TualatinChamber.com
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Sources:
Journal of Accountancy https://www.journalofaccountancy.com/news/2021/mar/ppp-borrowers-can-use-gross-income-sba-rules.html
Journal of Accountancy https://www.journalofaccountancy.com/news/2021/mar/aicpa-calls-on-sba-to-change-unfair-ppp-guidance-deadline.html
Journal of Accountancy https://www.journalofaccountancy.com/news/2021/feb/new-ppp-changes-smallest-businesses-access-to-sba-funds.html
ABA Banking Journal https://bankingjournal.aba.com/2021/02/biden-administration-announces-measures-to-target-ppp-loans-to-smallest-firms/
Land Line Now:
https://landline.media/ppp-loan-changes-aim-to-help-sole-proprietors-independent-contractors/
BKD CPA:
AG Daily: https://www.agdaily.com/news/farmers-improved-small-business-support-ppp-reopens/
Wisconsin State Farmer: https://www.wisfarmer.com/story/opinion/columnists/2021/01/12/ppp-loan-application-details-announced/6649032002/