Dear business clients and friends,
The Small Business Administration (SBA) issued new rules on March 3 allowing non-agricultural sole proprietors the opportunity to apply for larger PPP loans. Instead of using net profit from their Schedule C tax form, sole proprietors can now use gross income before expenses, up to $100,000, for owner compensation. As you may be aware, farming sole proprietors have been eligible to use rules similar to this since the second round of the PPP opened up in January.
The new rules only apply to new loan applications. Applicants cannot go back and get additional funds on a loan that has already been approved. However, it is applicable to both first draw and second draw loans, allowing a business owner to apply for a first draw loan if they haven’t previously done so.
The SBA did say that loans using gross income of more than $150,000 will be subject to review, and do not meet the safe harbor for deemed economic necessity. Therefore, applicants may need to prove their certification that the proceeds were necessary to support ongoing operations due to current economic uncertainty.
The deadline to apply for a PPP loan is March 31.
Please contact us if you have any questions or need assistance with your PPP loan application.
Van Bruggen & Vande Vegte, PC