The SBA released its new interim final rule and new application forms implementing Paycheck Protection Program changes for sole proprietors and other borrowers that file IRS Form 1040, Schedule C. An SBA webinar on the updates is scheduled for today.

Key Provisions:

  • The new IFR includes a revised loan calculation formula for Form 1040, Schedule C sole proprietors, independent contractors, and self-employed individuals using gross income instead of net income, as advocated by ICBA.
  • The rule spells out the calculation for these borrowers in two ways: those with no employees and those with employees.
  • Schedule C filers using gross income to calculate loan amounts with more than $150,000 in gross income will not automatically be deemed to have made the statutorily required certification concerning the necessity of the loan request in good faith. These borrowers may be subject to a review by SBA of their certifications.
  • The rule also sets aside $1 billion for PPP loans to businesses in this category that do not have employees and are located in low- or moderate-income areas.
  • The higher loan amounts for Schedule C borrowers apply to applications filed after the rule’s effective date. Loan amounts cannot be increased once the loan is disbursed to the borrower, so lenders and borrowers may wish to cancel loans that have not yet been disbursed and reapply using the new Schedule C application form.
  • The rule also includes provisions on small-business owners delinquent on their federal student loans or with prior non-fraud felony convictions and non-citizen small-business owners who are lawful U.S. residents.

Resources from SBA:

For Lenders:

For Borrowers:

Webinar Today: The SBA is scheduled to hold a Microsoft Teams webinar on these updates at 4 p.m. (Eastern time) today, March 4.

More: Additional PPP information and resources are available on the SBA and Treasury sites and ICBA's PPP and EIP News page.