PPP Changes for Sole Proprietors, Self-Employed Individuals

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On March 3, the Small Business Administration (SBA) released guidance allowing sole proprietors and other self-employed individuals to calculate their maximum Paycheck Protection Program (PPP) loan amount using gross income instead of net profit. The new guidance came following the Biden Administration’s announcement that it would help self-employed individuals receive more financial support through PPP.

Under the rules, self-employed business owners with no employees can now elect to calculate their maximum PPP loan using their 2019 or 2020 gross income, divided by 12, multiplied by 2.5. Borrowers were previously required to calculate their maximum loan amount using net profit, leaving many businesses that do not turn a profit ineligible for PPP.

These rule changes only apply to loans made after March 3. Borrowers that already received PPP loans cannot retroactively request an increase in their loan amount. However, bookstores may be eligible for a second draw PPP loan if they 1) employ 300 or fewer employees, 2) have fully exhausted their first PPP loan, and 3) demonstrate at least a 25 percent reduction in gross receipts in any quarter in 2020 compared to the same quarter in 2019.

Learn more about the specifics of the rule here.

For specific questions about your existing PPP loan, contact your lender. To apply for a PPP loan, use the SBA’s Lender Match tool.