One of the key provisions of the new HEALS Act is a second round of the Paycheck Protection Program (PPP) loans. On January 9, the Small Business Administration (SBA) released its application for businesses to apply to receive “PPP2” funding. There is more than $284 billion allocated for forgivable “PPP2” loans with a reduction in the amount available for each loan from $10 million (in the first round) to $2 million.
The good news is that it includes freelancers. Per The Wall Street Journal, the PPP2 loan application process will start this coming Wednesday to be launched initially from community-based lenders, followed soon after by other banks.
If you did not get a PPP loan in 2020, you can apply starting Monday for the initial PPP loan.
These loans are obtained from banks who act as agents for the Small Business Administration of the United States.
Here are some of the key things you need to know if you are considering applying for this round of PPP loans:
An important note: The Payroll Protection Program (PPP) loan forgiveness amount will not be considered taxable income at the federal level. This could be a significant tax saving for your business. However, there is not any change in the guidance for state and local tax treatment of PPP funds. Therefore, be sure to check with your own State and local tax authorities for additional information.
Paycheck Protection Program (PPP) loans as well as other provisions all of which can help your freelance business if your income has been negatively impacted by the pandemic. However, you should also be aware of how participating in these programs (now or if you accessed them previously) may impact your freelance taxes.
Jonathan Medows is a certified public accountant licensed in New York, New Jersey, Maryland, and Pennsylvania. He is also a recognized expert in taxation for freelancers and the self-employed—often tapped for his expert knowledge and perspective on self-employment taxation by national and regional publications such as The New York Post, BusinessWeek, Forbes taxation blog, WebCPA, CPA Practice Advisor, and others. You can read some of Jonathan’s press coverage here.
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