We have been getting a lot of questions regarding whether or not independent contractor payments are included in the PPP Loan Program. The answer is NO. This is a program for employees, not independent contractors. If you are structured as a 1099 payer, you are NOT eligible for to obtain forgiveness under this program as that is NOT payroll. Any receiver of 1099 income may apply for their own disaster relief. It would be fraudulent to include those payments as payroll under this program. We encourage you to contact your bank for guidance on the loans. The online portal is supposed to be available on Monday.
- The amount you can borrow is based on average monthly payroll. Payroll means salaries, wages, commissions, payroll taxes etc paid over the 12-month period. Your payroll company should be able to provide you with this number, but remember you need to cap any individual employee at $100,000. Partners who take a draw must cap at $100,000 in this calculation as well. You need to use the last 12 months to calculate your 12-month average. We are not sure what the look back date will be. You should prepare a 2019 average, a 2/15 average, and a 3/1 average so that you are ready with the information that may be required. You can apply for 2 ½ times your average monthly payroll. We believe that up to $100,000 per individual can be K-1 income. This becomes complicated and you should consult your tax professional and/or payroll company regarding these calculations.
- You should have copies of the front and back of drivers’ licenses of owners, articles of incorporation, and operating agreements will likely be required.
- The application form has recently been amended (version 3).
- The forgiveness process: The amount you can borrow is 2.5 times your average monthly payroll. If the money that you receive is used for approved categories, that money should be forgiven. Payroll, payroll taxes, rent, mortgage interest and utilities, subject to certain limitations if you can keep the employee number and pay steady and at least 75% of the funds go to payroll expenses over the eight-week period.
- We recommend these funds go into a separate account and you transfer the money into your operating account for payroll and other eligible expenses (up to the 25%).
- Remember, the point of this program is to keep people off unemployment and employed.
- We encourage you to get your application in as soon as possible if you qualify.
- Document, document, document in case you need to justify your application or the forgiveness of any portion of the loan.
As always, if you have any specific questions regarding your practice, please do not hesitate to call us at 732.238-8686.
