PPP Forgiveness Application for Self-Employed
As most of you already know, the funds given as PPP for Self-Employed automatically qualify for full forgiveness as long as you used it as Owners Compensation Replacement. The SBA introduced the concept of the Owner Compensation Replacement early this year to allow self-employed individuals such as independent contractors and gig workers -since they don’t pay themselves through payroll- to simply claim a portion of their 2019 Net profit as reported on line 31 of your Schedule C to make up for lost income due to COVID-19.
If you are using the 8 weeks forgiveness period you can claim 8 weeks’ worth of owner compensation and the rest of the funds needs to be used to pay utilities, rent, and mortgage interest expenses (following PPP guidance for full forgiveness).
You can extend your forgiveness period to 24 weeks to guarantee all the funds are used as Owner Compensation Replacement.
Even though it is an automatic qualification it doesn't mean you don't have to still apply for it. We recommend contacting your lender to ask if they have an application form and their requirements in order for you to apply as soon as they are available to do so.
The SBA has provided what is called an “EZ Form” or Simplified Forgiveness Application/ 3508EZ that applies to those self-employed that don't have any employees on payroll. If this is not your case you can still use the standard forgiveness application.
We leave you here the Instructions to fill out form 350EZ.
Be aware that Owner Compensation Replacement is considered income. If you applied for unemployment you need to make sure the weeks of OCR (either 8 or 24) can not be the same as the ones claimed as unemployed.
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