In an effort to target PPP loan relief to very small businesses, the Biden administration announced it will revise how loan amounts are calculated for Schedule C earners. The official announcement did not provide details about the change, but according to the New York Times and other sources, under the revised formula the loans will be based on 2.5 times the business’s 2019 average monthly gross income rather than their net profits (which for many was $0).
According to various articles, the change will not be implemented until early March.
The fact sheet also stated that over a 14-day period, starting Wednesday, February 24, only businesses with fewer than 20 employees can apply for PPP funding.
Big questions that need to be answered:
- Will businesses that already received loans be allowed to reapply under the new guidelines?
- Will the new formula apply to applications in process or should applicants pull their applications and reapply?
We will keep you posted as more information becomes available.
The full text of the fact sheet can be found here:
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