April 16, 2020
Authored by: Matt Macia and Samantha Goldberg-Seder
On April 14, 2020, the SBA published an interim final rule that provides additional guidance regarding topics of confusion among both Payroll Protection Program (“PPP”) lenders and borrowers. This new rule supplements the first interim final rule, which was issued by the SBA on April 2, 2020, and specifically addresses the eligibility of self-employed individuals, partnerships, director-owned businesses, and legal gambling businesses. This post covers the updates detailed in the new interim final rule, based on the latest guidance from the SBA as of April 16, 2020.
The new interim final rule makes clear that an individual may be eligible for a PPP loan if the individual:
- was in operation as a business on February 15, 2020;
- is an individual with self-employment income (such as an independent contractor or a sole proprietor);
- has a principal place of residence in the United States; and
- filed or will file a Form 1040 Schedule C for 2019.
The SBA has communicated that it will issue additional guidance for those individuals with self-employment income who: (i) were not in operation in 2019 but who were in operation on February 15, 2020, and (ii) will file a Form 1040 Schedule C for 2020.
We note that individuals should be aware that participation in the PPP may affect eligibility for state-administered unemployment compensation or unemployment assistance programs.