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PPP Loan Forgiveness FAQs for Self- Employed Individuals

What are the acceptable uses of the PPP funds for self-employed individuals?

Owner compensation replacement (calculated based on 8/52 of 2019 net profit from Form 1040 Schedule C)

  • Employee payroll costs (as defined by the interim rule)

  • Business mortgage interest payments on real/personal property

  • Business rent payments

  • Business utility payments

  • Interest payments on debt obligations incurred before February 15, 2020

  • Refinancing an SBA EIDL loan made between January 31, 2020 and April 3, 2020

Note that the individual must have claimed or be entitled to claim a deduction for the included expenses on 2019 Form 1040 Schedule C.

What amounts will be eligible for forgiveness for self-employed individuals?

The amount of the loan forgiveness will depend on the amount spent during the 8 week period on:

  • Payroll costs as defined by the interim rule (does not include benefits for owners)

  • Owner compensation replacement (limited to 8/52 of 2019 net profit and excluding any qualified sick or family leave equivalent amount for which a credit was claimed under FFCRA)

  • Interest payments on mortgage obligations for real/personal property incurred before February 15, 2020

  • Rent payments on lease agreements in force before February 15, 2020

  • Utility payments under service agreements dated before February 15, 2020

*Note that for interest, rent and utility payments, the amounts must be deductible on Form 1040 Schedule C.

What are the restrictions on determining the amount of loan forgiveness for businesses other than self-employed individuals?

At least 75% of the loan proceeds must be used for payroll costs. If salaries decrease by more than 25% for any employee who made less than $100,000 annualized in 2019 OR if the number of FTEs decreases, the forgiveness amount will be reduced.

To view the PPP Loan Forgiveness Checklist, Click Document Below.

PPP Loan forgiveness doc
Download PDF • 1.39MB

To View More FAQs, Click Here.

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