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Self-employed workers and workers who have waited for new rules that would mean higher loans to be forgiven through the Wage Protection Program can now move forward with their applications.
As of Friday, the Small Business Administration is ready to accept and process updated PPP applications from individual homeowners who want to take advantage of a new loan calculation, the agency confirmed.
This means that individual homeowners can finally submit their applications to creditors, who can send them to the SBA for processing in accordance with the new loan calculation guidelines.
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The changes come after the Biden administration announced updates to the PPP in late February, including the revised loan calculation for sole proprietors, as well as new eligibility rules for some noncitizens, those with certain criminal records and those who entered. in default or have been delinquent on student loan debt. .
In addition, the administration has announced a 14-day priority window for companies with less than 20 employees to apply for PPPs. The period began on February 24 and will end on March 9.
While the focus of the priority period has been to give the smallest businesses, which are disproportionately owned by women and minorities, a step in receiving funding, the timing of the new loan calculation rule has led to confusion for some. The SBA did not release guidelines on the new lender calculation until March 3 and was not ready to process the updated applications in its system until Friday.
What you need to know before applying
Now that the SBA is ready to accept and process applications, small businesses should be able to apply for PPPs and be subject to new loan calculations.
To be sure, some lenders may still be working to upload new applications to their system, so business owners should confirm that they have the correct forms to apply.
Updated PPP applications for self-employed workers and individual owners who file IRS Form 1040 List C now claim the total amount of gross income, which is in line 7 of the tax form. Previously, Annex C applicants applying for PPP loans were required to grant the SBA the net profit from line 31 of the form.
Those applying for a PPP loan on the first draw should use Form 2483-C, and those applying for a loan on the second draw should use Form 2483-SD-C, which includes the new calculation information.
Priority application window
For small businesses that are subject to the new rule and want to take advantage of the priority application period, time is ticked. The window will close at 17:00 ET on March 9, when creditors will be able to process applications from all sizes of small businesses.
However, individual homeowners will be able to apply for and see loans processed by creditors after closing the priority window. The deadline for the global program is currently March 31, unless Congress extends it.
In addition, creditors say they do not believe the program will run out of money before the March deadline. This year, as of Feb. 28, the SBA had approved $ 2.2 million in loans worth more than $ 156 billion, just over half of the $ 284 billion the program had when it reopened in January.
“Given the pace at which the funds have gone, it doesn’t look like they will all be used by the March 31 deadline,” said Alex Prombaum, president of Liberty SBF, a non-bank lender. “The priority window may fall, but it will not mean that people are left in the cold.”
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