Yes. The federal government launched the Paycheck Protection Program in early 2020, which aims to assist small businesses in surviving the global epidemic with a crew, deterring loss of employment and salary cuts. PPP loans were the primary small-business mechanism in place of the CARES Act, designed to provide forgivable loans to small businesses.
According to reports, the loans might have been for close to $10 million, or 2.5 times staffing costs, with no leverage needed. The CARES Act’s Paycheck Protection Program was put into effect by the Small Business Administration with the help of the Treasury Department.
This program made provision for smaller companies to cover up to 8 weeks of employee wages, along with other benefits. By approving up to $659 billion in employee retention and other expenditure, the Paycheck Protection Program favored millions of Americans engaged in smaller companies.
Participants who are self-employed or independent contractors, smaller companies and qualified nonprofit organizations,veterans organizations, and tribal businesses discussed in the small business act, will be considered if they meet the program guidelines.
Despite the fact that SBA structured the standards to assist small business owners, there is a restriction when obtaining a PPP loan.
As a result, publicly traded companies are unlikely to be included. This is because the government organized such loans, particularly for small companies that are handicapped. Private equity firms, hedge funds, and publicly traded companies that exceed a specific limit won’t meet the criteria.
Other Companies that are Eligible for PPP Loans
Contractors and sole proprietorships
Sole proprietorships, contractors, and even gig workers are eligible for PPP loans, depending on their net income. Contractors who were already in business on or before February 15, 2020, can qualify for the PPP with a submitted Schedule C for 2020. Although your Schedule C is not required to be submitted, it deserves to be assessed by a tax professional for its correctness and execution. In some cases, 1099-MISC forms may be required.
The amount available to you would be 2.5 times your average monthly net income. Business owners determine this sum by taking net income; dividing it by 12 to obtain an average, and then multiplying it by 2.5. This loan can be repaid over a 24-week period.
Partnerships businesses can be qualified for a PPP loan, depending on their payroll figures and other income. Utilize your payroll figures, and also include self-employment income as disclosed upon every partner’s Schedule K-1 to determine your PPP loan. Start by taking 2020 totals, dividing by 12, and multiplying by 2.5 to get your loan amount.
Note that business owners with more than 300 workers may not qualify for a second draw, and will be excluded if they are unable to show 2020 quarterly losses of at least 25% in correlation to 2019. Contractor payments, as well as any draws or distributions, are not deemed payroll expenditures.
Even though the SBA designed the criteria to aid small business owners, there are some restrictions on who can acquire a PPP loan. There is a defined line or statutory provisions regarding what qualifies as a small business for the purpose of the Paycheck Protection Program.