What The SBA Is Doing To Help The Self Employed
If you are self-employed and are struggling to make ends meet, the latest government initiative is good news for you. The Small Business Administration (SBA) has issued new guidelines for PPP loans, which are tax-free and revolving credit cards that help people who own their own businesses. The interim final rule explains eligibility requirements and how to calculate the loan amount. The new rules also clarify when the loan can be forgiven.
The Paycheck Protection Program was created under the CARES Act and authorized the Small Business Administration to make loans to small businesses. This program enables small businesses to maintain a workforce and manage expenses during the outbreak of the COVID-19 coronavirus. Congress earmarked $284 billion to the program on December 21, 2020. Participating lenders will now be able to offer First Draw Paycheck Protection Program Loans.
The updated PPP application requires more detailed information about self-employment income. Schedule C filers should complete Form 2483-C to apply for a first-draw loan. Second-draw applicants should use Form 2483-SD-C. It is important to fill out the application fully because the lender will look at the self-employment income and the personal guarantee. Applicants should also be aware of the changes in the SBA’s policy on loans for self-employed.
Despite changes in the tax law, the PPP is important for the future of the economy. It will help millions of American businesses find new markets and grow. The economic aid Act, which passed in December, contains new PPP loans and additional funding for qualifying businesses. The guidelines should be carefully reviewed and discussed with a tax professional, financial advisor, or attorney. The SBA is also making new guidelines for self-employed Form 1040 Schedule C.