June 5, 2020 …


We have been talking about the Paycheck Protection Program (PPP) for quite a while now. As of last week, there was still some $100 billion in PPP funding available (per Journal of Accountancy). That means PPP funding is still available today and if you haven’t applied for a PPP loan, do it now!

More Favorable PPP Terms
The Senate just passed the House bill, called the Paycheck Protection Program Flexibility Act which extends the time allowed for PPP borrowers to spend the funds and still qualify for forgiveness of the loans. The two huge changes include:

  1. You now have 24 weeks to spend funds from time of origination, instead of the original 8 weeks.
  2. The percentage of funds required to be spent on payroll is dropped from 75% to 60%.

In addition, the legislation includes two new exceptions that allow you to achieve full PPP loan forgiveness even if you don’t fully restore your workforce. Previous guidance allowed you to exclude from those calculations employees who turned down good faith offers to be rehired at the same hours and wages before the pandemic. The new bill allows you to adjust because you could not find qualified employees or were unable to restore operations to February 15, 2020 levels due to the pandemic related operating restrictions.

New PPP borrowers now have five years to repay the loan instead of two. Existing PPP loans can be extended to five years if both lender and borrower agree. The interest rate remains at 1%.

PPP is Also for the Self-Employed with No Employees!
Yes, it’s true. As long as you are self-employed, have no employees, and have self-employment net profits of $100,000 or less, you can apply for PPP. The SBA states you are eligible for a PPP loan if:

  • You were in operation on February 15, 2020
  • You are an individual with self-employment income (independent contractor or sole proprietor)
  • Your principal place of residence is in the U.S.
  • You filed or will file a form 1040 Schedule C for 2019

When you are a self-employed taxpayer with no employees, the PPP treats you as the one and only employee and treats your net profits as your payroll. Your home-office deduction percentages of mortgage interest, rent and utilities quality for PPP forgiveness.

Under the PPP, you go to your bank or SBA bank or lender and obtain the PPP loan based on your 2019 net profits. It’s a no-doc-loan. No credit report, no nothing. Super easy!

As always, we are on your side. If you have questions, give us a call.

Team Legacy CPA
(541) 326-0993