Donna Bordeaux explains new PPP rules for Schedule C filers. Sole proprietors can now use gross income instead of net profit to qualify, with a maximum loan of $20,833 based on two and a half months of income. The change lets people who had net losses suddenly become eligible.
February 15, 2020
$100,000
$20,833
Gross revenue: $300,000; Net loss: $7,000
Hi, I'm Donna Bordeaux with calculatedmoves.com did you know that there have been some changes to the PPP rules that will allow sole proprietors filing a Schedule C to be able to increase the amount of their PPP loan? And if you weren't eligible before because you weren't profitable, guess what? Now you may be able to get the PPP loan. What the new calculations tell you are that you are allowed to use gross income. Before, we were using the net profit on the Schedule C, and as we know, many businesses are not profitable or they write off things that cause them not to be profitable, like vehicles, self rent, depreciation, and we're trying to reduce taxes. Obviously, we want the lowest income. So if you have a Schedule C, if you were in Business on February 15th of 2020, you may be eligible to apply for a PPP loan using the new rules with gross income on the Schedule C. If you had employees, you'll deduct simply the employee wages and any pension or benefit costs. If that number is over $100,000, you're limited to $100,000. So if you fall into that category, the maximum PPP loan would be for two and a half months, which is $20,833. So let me give you a quick example of a situation where somebody who wasn't eligible before would be eligible now. I was talking with a prospect and she had $300,000 in gross revenue on 2019's Schedule C, she had a loss at the bottom line of $7,000. In the prior calculations, that loss would determine that she's not eligible for a PPP loan. In the new calculation, she's able to take the $300,000 deduct off her employee costs, which she didn't have any. So she could take the $300,000. She would be limited to $100,000 of that times the two and a half months. So she went from having no PPP eligibility to getting $20,833. Under the new rules, if you have a Schedule C and you need help with your PPP loan and you'd like to get lined up with somebody who can keep you informed and abreast of these things all throughout the year, it's time for us to talk. I'd love to chat with you if you want to schedule an appointment with me, that there's a link in the upper right corner. Thank you very much. I'm Donna Bordeaux with calculated moves.
