With each loan application comes a unique set of facts, issues, and needs, and the SBA’s guidelines to borrowers and their lenders are constantly catching up to the pace of loan issuance. Enter the sum of interest payments on any business mortgages that were in effect before February 15, 2020. The Economic Aid Act increases the likelihood that self-employed individuals will qualify for full forgiveness based on owner’s compensation replacement. But if not, any remaining balance will become a loan at 1% interest for five years, unless the loan was made before on or after June 5, 2020. In those cases the repayment period is two years, unless the lender agrees to a longer repayment period.
Paycheck Protection Program Loans and the Business Affiliation Rules: “Don’t Wing It”
SBA Form 3508 and SBA Form 3508EZ do require a borrower to provide additional documentation upon forgiveness submission. Applying for forgiveness using the portal can take as little as 15 minutes. The questions you will be asked in the portal correspond to those asked on SBA Form 3508, SBA Form 3508EZ, or SBA form 3508S. Effective March 13, 2024, all borrowers, regardless of loan size, can use SBA’s direct forgiveness portal.
Existing borrowers
Lenders typically decide when to submit individual PPP loan applications to SBA. Therefore, any questions or concerns regarding individual PPP loan applications must be directed to your lender. If all your employees were paid at least 75% of their original pay (between January 1 and March 31), check the box and enter 0. This is your E-tran number that the SBA generated for you. If you have multiple businesses and multiple PPP loans, you will have more than one E-tran number. If you don’t know where to find this number, speak to your lender—they’ll have it on file.
If you’re self-employed and qualified for a Paycheck Protection Program (PPP) loan, then no doubt you are hoping you can get as much of it forgiven as possible. Get our latest news and information on business finance, management and growth. Michael Jones is a Senior Editor for Funding Circle, specializing in small business loans. He holds a degree in International Business and Economics from Boston University’s Questrom School of Business. Prior to Funding Circle, Michael was the Head of Content for Bond Street, a venture-backed FinTech company specializing in small business loans.
What is Schedule C income?
If you have employees or otherwise don’t meet these requirements, read our full article difference between paid in capital and retained earnings on forgiveness here. Read more on how the PPP loan works or submit an application for PPP funding with Funding Circle. And while hypnotherapy is usually personal, it’s an essential cost for creating a safe work environment and improving his job performance.
- A partner in a partnership cannot apply for a PPP loan; instead, the partnership must apply for the loan by reporting the self-employment income of the active general partners as a payroll cost.
- Before, these loans were likely not worth the effort for you—however, now you have the potential to earn some fully forgivable, tax-free financing.
- Otherwise, if Step 4 is greater than Step 2, check the box and enter 1.0 on line 13.
- Furthermore, interest payments on any other debt obligations incurred before February 15, 2020 can be paid with PPP loan funds, though those amounts are not eligible for PPP loan forgiveness.
Enter the compensation paid to yourself and your partner(s). For self-employed individuals, this is where you can enter your owner compensation replacement. Partnerships (or in general, if any other individuals were compensated as an owner), include a separate table that lists how the compensation was paid out (names and amounts). For that reason, it seems it would be a good practice the balance sheet to write yourself a check from your business account, or use ACH transfer from your business account to your personal account to pay yourself. Whichever method you choose, keep good records in case the SBA later audits your loan. Self-employment income is reported on Schedule C. If you’re a freelancer, sole proprietor, side hustler — basically, if you’re self employed in any way — you’ll report that self-employment income on Schedule C.
Step #2: Fill out your income and cost of goods sold
Note, however, that these new changes are not retroactive. If you’ve already applied for a PPP loan, your total loan amount based on the gross income calculation can’t be increased. The documents you’ll be required to submit will vary by lender, you’ll want to make sure you gather the right documents. Before, these loans were likely not worth the effort for you—however, now you have the potential to earn some fully forgivable, tax-free financing.
It’s usually paired with a Schedule SE (Form 1040), or self-employment tax form. If you’re filing your self-employment taxes yourself this year, you’ll need a Schedule C guide you can trust. Not to toot my own horn, calculate cost of goods sold but I’ve got all the Schedule C info you’ll ever need.
