Freelancers can submit new PPP loan applications to the SBA

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Self-employed and temporary workers who have been waiting for new rules that would mean larger forgivable loans through the Paycheck Protection Program can now go ahead with their applications.

Starting Friday, the Small Business Administration is ready to accept and process updated APP applications from sole proprietors looking to take advantage of a new loan calculation, the agency confirmed.

This means sole proprietorships can finally submit their applications to lenders, who can submit them to the SBA for processing under the new loan calculation guidelines.

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The changes come after the Biden administration in late February announced updates to PPP, including the revised calculation of loans for sole proprietors, as well as new eligibility rules for some non-citizens, those with certain criminal records, and people who had defaulted or were in default on student loan debt. .

Additionally, the administration announced a 14-day priority window for companies with fewer than 20 employees to apply for PPP. The period began on February 24 and will end on March 9.

While the focus of the priority period was to give smaller businesses, which are disproportionately owned by women and minorities, an advantage in receiving financing, the timing of the new loan calculation rule created confusion for some. The SBA did not provide guidance on the recalculation to lenders until March 3 and was not ready to process updated applications in its system until Friday.

What to know before applying

Now that the SBA is ready to accept and process applications, small businesses should be able to apply for PPP and be subject to the new loan calculations.

Certainly, some lenders may still be working to upload the new applications to their system, so business owners should confirm that they have the correct forms to apply.

Updated PPP applications for self-employed and sole proprietors filing IRS Schedule C Form 1040 now request the total amount of gross income, which is found on line 7 of the tax form. Previously, Schedule C filers applying for PPP loans were required to give the SBA their net earnings, from line 31 of the form.

Those applying for a first draft PPP loan should use Form 2483-C and those applying for a second draft loan should use Form 2483-SD-C, which includes the new calculation information.

The priority application window

For small businesses that are subject to the new rule and want to take advantage of the priority application period, time is running out. The window will close at 5 p.m. ET on March 9, at which time lenders will be able to process applications from small businesses of all sizes.

Still, sole proprietors will be able to apply for and view loans processed by lenders after the priority window closes. The deadline for the overall program is currently March 31, unless extended by Congress.

Plus, lenders say they don’t think the program will run out of money before the March deadline. This year, through February 28, the SBA had approved 2.2 million loans that equaled more than $ 156 billion, just over half of the $ 284 billion the program had when it reopened in January.

“Given the rate at which the funds have gone, it doesn’t seem like all of them have been used by the March 31 deadline,” said Alex Prombaum, president of Liberty SBF, a non-bank lender. “The priority window may expire, but that won’t mean people are left out.”

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