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Self-employed workers who have been waiting for new rules that would mean larger forgivable loans through the Payroll Protection Program can now move forward with their applications.
As of Friday, the Small Business Administration is ready to accept and process updated PPP applications from sole proprietors who want to take advantage of a new loan calculation, the agency confirmed.
This means that individual homeowners can finally send their applications to lenders, who can send them to the SBA for processing according to the new loan calculation guidelines.
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The changes come after the Biden administration announced PPP updates in late February, including the revised loan calculation for homeowners, as well as new eligibility rules for some noncitizens, those with certain criminal records, and people who had defaulted on student loan debt or who were in arrears. .
In addition, the administration announced a 14-day priority period for companies with less than 20 employees to apply for PPPs. The period began on February 24 and will end on March 9.
While the priority period focused on giving smaller businesses, which disproportionately belong to women and minorities, an opportunity to receive funding, the timing of the new loan calculation rule caused confusion for some. The SBA did not issue guidelines on the new calculation to lenders until March 3 and was not ready to process updated applications on its system until Friday.
What you need to know before submitting your application
Now that the SBA is ready to accept and process applications, small businesses should be able to apply for PPPs and be subject to new loan calculations.
By the way, some providers may continue to work to upload new applications to your system, so business owners should confirm that they have the correct forms to apply for.
Updated PPP applications for self-employed workers and homeowners who file Form IRS on Form 1040 on List C now request the total amount of gross income, which is on line 7 of the tax form. Previously, Annex C applicants applying for PPP loans were required to give the SBA their net benefit, starting at line 31 of the form.
Applicants for a first-draw PPP loan should use Form 2483-C and those applying for a second-draw loan should use Form 2483-SD-C, which includes the new calculation information. .
The priority application window
For small businesses that are subject to the new rule and want to take advantage of the priority application period, time is passing. The window will close at 5pm ET on March 9, at which time lenders will be able to process applications of all sizes from small businesses.
However, sole proprietors will be able to apply for and view the loans processed by the lenders after closing the priority window. The deadline for the global program is currently March 31, unless Congress extends it.
In addition, lenders say they do not think the program will run out of money before the March deadline. This year as of Feb. 28, the SBA had approved 2.2 million loans worth more than $ 156 billion, just over half of the $ 284 billion the program had when it reopened in January.
“Given the pace at which the funds have gone, it doesn’t look like they will all be used until March 31,” said Alex Prombaum, president of Liberty SBF, a non-bank lender. “It is possible that the priority window will expire, but it does not mean that people are left out of the cold.”
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