On March 3, the SBA released an interim final rule which officially implements changes to the Paycheck Protection Program that had previously been announced by the White House on February 22. One of the most impactful changes applies to borrowers who file an IRS Form 1040, Schedule C.
On Friday, March 5, the SBA began accepting new application forms which provide borrowers the choice to use either gross income or net profit in their calculation of total payroll costs.
Those with an application in process (that has not yet funded), can update the loan calculation in accordance with this guidance.
It is important to note:
- These changes are not retroactive and only apply to loans approved after the rule’s effective date. Borrowers that have already received their PPP loan cannot increase their PPP loan amount based on the new calculation.
- Single-Member LLCs that file a Schedule C are covered under this change.
- Partners and Partnerships are not covered under this change.