PPP Formula Enhanced For Sole Proprietors Earning Less Than $100K

The SBA announced on 2/22/21 at: https://www.sba.gov/article/2021/feb/22/sba-prioritizes-smallest-small-businesses-paycheck-protection-program:

  • The SBA will Allow sole proprietors, independent contractors, and self-employed individuals to receive more financial support by revising the PPP’s funding formula for these categories of applicants

Since first being introduced last March, the PPP formula required that sole proprietors, independent contractors, and self-employed individuals base their PPP loan calculation on their net income as reflected on the Schedule C filed as part of their personal tax returns.  Anyone earning $100k or more generally qualifies for the maximum PPP loan of $20,833.

The new formula is based on gross Schedule C revenue instead of net income.  Any business earning less than $100k that has expenses, therefore, should be able to get a higher PPP loan with this formula.

According to an article written by the American Institute of CPAs on 3/3/21 available at: https://www.journalofaccountancy.com/news/2021/mar/ppp-borrowers-can-use-gross-income-sba-rules.html:

The new IFR allows a Schedule C filer who has yet to be approved for a PPP first- or second-draw loan in the current, $284.5 billion phase of the program to elect to calculate the owner compensation share of its payroll costs based on either net profit (as reported on line 31 of Schedule C) or gross income (as reported on line 7 of Schedule C). If a Schedule C filer has employees, the borrower may elect to calculate the owner compensation share of its payroll costs based on either net profit or gross income minus expenses reported on lines 14 (employee benefit programs), 19 (pension and profit-sharing plans), and 26 (wages (less employment credits)) of Schedule C. If a Schedule C filer has no employees, the borrower may simply choose to calculate its loan amount based on either net profit or gross income.

And according to an article written by the American Institute of CPAs on 3/5/21 available at: https://www.journalofaccountancy.com/news/2021/mar/aicpa-calls-on-sba-to-change-unfair-ppp-guidance-deadline.html, there are some pitfalls with the new rules, including:

  1. The new formula only applies to new PPP loans. Loan already approved can’t be increased.


  1. “The March 31 deadline for PPP applications to be pushed back, in part because the changes mandated by the new IFR are significant enough that lenders won’t be able to implement them into their PPP portals for at least a week”.

Please reach out to your bank or PPP1 lender for more info.

PPP For Small Business and Sole Proprietors

SBA offers several different relief options to help businesses, nonprofits, and faith-based organizations recover from the impacts of COVID-19.

In order to reach the smallest businesses, SBA will offer Paycheck Protection Program loans to businesses with fewer than 20 employees and sole proprietors only from Wednesday, February 24 through Wednesday, March 10, 2021. President Biden has also announced additional program changes to make access to PPP loans more equitable.

Please visit their website for more details at: https://www.sba.gov/page/coronavirus-covid-19-small-business-guidance-loan-resources


PPP Round 2 Applications Now Being Accepted

Lenders are now accepting applications for the Second Draw PPP loans. Keep in mind that the recent enacted Stimulus Package included a provision that the PPP2 Loan can be both fully forgiven and also not taxable to the business owner.

To be eligible for PPP Round 2, your practice must show at least one quarter during 2020 where the revenue dipped by more than 25% from the same quarter of the previous year.  Most healthcare practices that were forced to close last spring should qualify based on their Q2 numbers.  We gave instructions at: https://schwartzaccountants.com/2021/01/ppp-update/ on how you can create a report in your QuickBooks Online to confirm that your quarterly revenue fell by at least 25%. You are required to include the quarterly revenue for 2019 and 2020 on the Second Draw Borrower application form.

What if your business wasn’t open for all four quarters of 2019? According to the instructions:

  • For entities not in business during the first and second quarters of 2019 but in operation during the third and fourth quarters of 2019, Applicants must demonstrate that gross receipts in any quarter of 2020 were at least 25% lower than either the third or fourth quarters of 2019. 
  • For entities not in business during the first, second, and third quarters of 2019 but in operation during the fourth quarter of 2019, Applicants must demonstrate that gross receipts in any quarter of 2020 were at least 25% lower than the fourth quarter of 2019. 
  • For entities not in business during 2019 but in operation on February 15, 2020, Applicants must demonstrate that gross receipts in the second, third, or fourth quarter of 2020 were at least 25% lower than the first quarter of 2020. 

Other requirements include being open on 2/15/20 and not currently permanently closed, and the business must have spent the full amount of the First Draw PPP Loan. The rules also state that current economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant, and the Applicant understand that SBA encourages the purchase, to the extent feasible, of American-made equipment and products.

How Much PPP2 Can You Get?

Business owners can base the PPP2 application on the 2.5 times the average monthly payroll for 2019 OR 2020.  The payroll is capped at up to $100k per employee, plus the employer payments for group health, life, disability, vision and dental insurance, employer retirement plan contributions, and state and local taxes assessed on employee compensation.  Group benefits and retirement plan contributions are excluded for sole proprietors and partners while S-Corps exclude just the group benefits.

Qualified Expenses:

Like Round 1, up to 40% of the PPP2 funds can be spent on non-payroll costs as part of the PPP Forgiveness calculation.  The SBA explains that PPP2 does expand the allowable expenses as follows:

Loan forgiveness will be provided for the sum of documented payroll costs, covered mortgage interest payments, covered rent payments, covered utilities, covered operations expenditures, covered property damage costs, covered supplier costs, and covered worker protection expenditures, and not more than 40% of the forgiven amount may be for non-payroll costs. If required, the Applicant will provide to the Lender and/or SBA documentation verifying the number of full-time equivalent employees on the Applicant’s payroll as well as the dollar amounts of eligible expenses for the covered period following this loan.

More information and useful links are available at:

Second Draw PPP Loans:


Paycheck Protection Program Second Draw Application Form:


Paycheck Protection Program How To Calculate Maximum Loan Amounts For First Draw PPP Loans And What Documentation To Provide – By Business Type


Please reach out to your PPP Lender to get the ball rolling. If you want us to prepare the PPP application for you, our fee is $750, discounted to $500 for clients who use our firm’s payroll service.

The deadline to apply for PPP Round 2 is 3/31/21.


Provider Relief Fund Recipients Need To Register At New HRSA Portal

2/15 Self-Reporting Deadline Extended to Unspecified Date

Did you receive more than $10k in Provider Relief Funds (PRF) from HHS?  If so, please go online to the Provider Relief Fund Reporting Portal available at: https://prfreporting.hrsa.gov and register as a new user.  Keep in mind that your Optum ID login credentials used to originally apply for the PRF won’t work for this Portal. Please let us register using our email address if you plan to have us submit this info to HRSA on your behalf for a fee of $500.

The purpose of this new Health Resources & Services Administration (HRSA) Portal is for PRF Recipients to submit the required post-payment reporting info to support that the Provider Relief Funds were used appropriately per the terms of the subsidy program available at: https://www.hhs.gov/sites/default/files/provider-post-payment-notice-of-reporting-requirements-january-2021.pdf.

The good news is that the previously announced 2/15/21 deadline for PRF recipients to submit the requested information appears to have been extended to some future unspecified date. According to the Provider Relief Fund (PRF) Reporting Portal FAQs, Last Updated 1/15/2021, available at: https://hrsac19.my.salesforce.com/sfc/p/#t00000004XgP/a/t0000001FId8/wN.4dTa.NRiNhwh_0CBblH6gvvedhqOt7_.5OS7rP6U

FAQ #1: Do I need to register for an account in the PRF Reporting Portal?

PRF recipients who received one or more payments exceeding $10,000 in the aggregate are required to report on several required data elements as part of the post-payment reporting process and therefore must register for an account.

FAQ #26. How can I report on the use of funds?

Providers will be notified when they should complete the second step of the process and report on the use of funds. This functionality is not currently available. You will be able to log into the PRF Reporting Portal at https://PRFReporting.hrsa.gov when the system is ready for providers to start reporting on the use of funds.

FAQ #27. When will I be able to begin reporting on the use of funds?

The operability of the PRF Reporting Portal for reporting on use of funds has been delayed. HRSA will announce the timeline for submission of these reports when it is available.

FAQ 28. How will HRSA communicate to providers when the PRF Reporting Portal is open for the submission of reports on the use of funds?

HRSA will communicate via broadcast email to the email address that was provided during registration. Providers can also check the Reporting Requirements and Auditing webpage for the latest updates about the PRF Reporting Portal.

Create A Winning Plan

Guest Writer Brenda Loan Baker, Executive Coach, Fortune Management Northeast

Here we are, the first week of January. The traditional time goals for the new year is upon us! What is the difference between the people who set their goals and reach or surpass them and those who fall short? What things can you do to make your goals more achievable or even likely? Read on to determine what determines your goals achievability.

It is easy to dream big and set lofty goals. I want to earn $X this year, I want to increase my collections to $X dollars, I want to have more confidence in myself and try new things. These are all great goals, attainable goals. These goals on their own are not just going to happen. The missing piece is how are you going to do that? If you want to make more money or increase your collections, start with where are you now? Come up with a list of 20 things you can do to get to you goal. There is science in the 20. Sometimes the last few things you come up with are the best because they are outside of the box thinking.

A secret weapon in goal achievement is looking deeper, and really clearly determining your why. Why do you want to lose those 30 pounds? What will that get you? You might determine that it isn’t just about the number on the scale. Perhaps it is something bigger, like increasing your health so that not only are you around to meet your grandchildren but healthy enough to run after them. Determining your why you will create a much stronger buy in for yourself. It isn’t just about a pound on the scale, it reminds you what you have to gain by meeting your own goals. This buy in helps you get up at 6am because it is the only time all day, or to leave that piece of cake on the table. It helps your goals become more achievable.

Next look at your list of 20. Pick 2 or 3 that you think might really work. Decide how you will try them, creating your action plan. Take massive consistent action. For example, to increase my patients I will ask one patient every day for a referral, I will send appointment reminders, and I personally call every patient after sedation treatment.

Once you have your clear action plan, decide how you will be accountable. Perhaps you will share with a friend and keep each other accountable (accountability partners). Maybe you will keep yourself from your celebratory Friday wine until you have all your boxes checked. Find some way to help you be accountable.

With these actions we need to measure and monitor. How do you measure confidence? How do you know if it has changed? With confidence, or any other thing, you want to set goals around, you can create a metric for it. How confident are you right now on a scale of one to 10, one being not at all and 10 being super confident?

The more consistent you are the better results you achieve. Do these things you have determined for a few weeks, a month (30 days) is a great sample time. When completed, look back. What worked? What did not work? Adjust your action steps and try again. You may need to go back to the drawing board here and revamp your action steps. Be open to trying something new or different.

Here are the steps:

  • Know your outcome
  • Determine your why
  • Take massive action
  • Measure and Monitor your results
  • Be willing to change your approach

Following these five steps will give you an exponentially better chance at reaching your goals this year.

I hope you make 2021 a great year. May you concentrate on something important to you, set your goals and reach them!! Connect with me to help you define and create this action plan and make 2021 the year you always dreamed of!
For more info, please email: brendaloan@fortunemgmt.com