As you are aware, a key program under The Coronavirus Aid, Relief, and Economic Security (CARES) Act is the Paycheck Protection Program (PPP). Many of our clients have already submitted and is some case received funding for PPP loans.This process is ongoing, as banks continue to process loan requests so that small businesses can continue making payroll and rent payments during the COVID-19 pandemic.

Yesterday afternoon the U.S. Treasury released an additional Interim Final Rule, which “supplements the First PPP Interim Final Rule with guidance for individuals with self-employment income who file a Form 1040, Schedule C.This rule also addresses eligibility issues for certain business concerns and requirements for certain pledges of PPP loans.”

This guidance addresses several primary questions that have arisen since the initial PPP guidance was issued.These questions include:

I have income from self-employment and file a Form 1040, Schedule C.Am I eligible for a PPP Loan?

The answer is ‘yes,’ and this guidance provides additional information regarding the calculation of and time period for determining eligible loan amounts.In the case of limited partnerships, only the income of general active partners may be included as eligible payroll (up to $100,000 annualized) for purposes of the loan application.Loan proceeds must be used in the same manner as other small business PPP loans – i.e. at least 75% of the loan proceeds must be used for payroll costs.This guidance also discusses how forgiveness will be determined for PPP recipients who file a Schedule C.

Are eligible businesses owned by directors or shareholders of a PPP lender permitted to apply for a PPP loan through the Lender with which they are associated?

Eligible businesses will be allowed to apply for PPP loans if they are owned by an individual who is an outside director in a PPP lender or by an individual with less than 30 percent equity interest in that business.Favoritism may not be a part of the loan approval process and the same standards must apply to such loans as what is imposed on other borrowers.

We understand that there are many more questions regarding PPP loan applications and forgiveness.It is anticipated that the U.S. Treasury will continue to issue guidance as necessary to inform borrowers and their advisors in order achieve successful outcomes through this loan program.

For additional information regarding the Paycheck Protection Program, you may also visit the SBA’s website.Please contact your RS&F Client Advisor for additional details regarding PPP and if you need assistance with your loan application.