The paycheck protection program reduction of income tool at the end of this article will help you see if you qualify. If any one quarter qualifies, you meet the reduction of income qualification. If your gross revenues were $7,500 or less, that would qualify you. Let's say you made $10,000 in the fourth quarter of 2019.
That can be a yearly total or for one quarter. SBA Interim Final Rules on Second Draw PPP Qualification released 1-21-2021Īnother way of putting it is, if you made less than 75% of what you made in 2020, you qualify. To be eligible for a Second Draw PPP Loan, the borrower must have experienced a revenue reduction of 25% or greater in 2020 relative to 2019. for second draw PPP Loans What is the 25% reduction of revenue requirement? The SBA has released guidance that provides more detail about qualification, documentation etc.
You can get more information on the types of businesses at the SBA website.Īnd then you have to have at least a 25% reduction of revenue for at least one quarter relative to the previous year. I won't go into details here as I focus primarily on independent contractors in the gig economy. Your business cannot be a certain type of business. That's not hard for most of us who are independent contractors. You have to have less than 300 employees. You can qualify for similar funding (2.5 months times your average monthly income). The second draw relates to those who have received PPP funding in the past. If you have not received PPP funds, you may be able to apply under the original Paycheck Protection Program. This article focuses on the second draw of the Paycheck Protection Program. If you drove so many miles that you never owed taxes, you won't qualify. That's because the loan is based on 2.5 months times your average monthly profit. This isn't stated specifically in any documentation I found but it's implied. If you are an independent contractor with any of the gig economy companies like Grubhub, Doordash, Postmates, Uber Eats, Lyft, Instacart or others, but you only started with them after February 15, you won't qualify.Īs independent contractors, you have to have had a taxable profit in the past. This program is focused on existing businesses that were harmed by the pandemic. I'll start right off with this: You have to have been in business prior to February 15, 2020. The main qualifications for the second draw of the PPP Program. You need to have one quarter that earned at least 25% less than the same quarter in the year before. This time around, you have to show a drop in gross income. What is the income reduction requirement for the second draw of the Paycheck Protection Program (or PPP 2.0)? At the end of the article you can access an interactive tool that helps you identify if you had enough of a reduction of income to qualify for the second draw of the paycheck protection program.How an independent contractor can get their information together to see if they qualify.What the income requirements are for the second draw of the paycheck protection program.You can enter your preliminary application information with Womply who will locate a lender that can work with you Paycheck Protection Program applications will be opening up soon. In particular you have to demonstrate that your business suffered a financial loss during the pandemic. The requirements for applying for a second loan are a little more stringent this time around. This article focuses on whether you qualify for the 25% income reduction qualification for the Paycheck Protection Program 2.0 second draw funding. We write more about the renewal of the Paycheck Protection Program forgivable loans, and you can see a list of our PPP articles at the bottom of this article. It also adds a second draw for those who did receive funding. The act renews the PPP and makes it available for those who were not able to get funding previously. Part of that package is what's called the Paycheck Protection Program 2.0. The Consolidated Appropriations Act of 2020 (signed December 27) included some economic stimulus measures for pandemic relief. Under special circumstances, you may be able to take a second loan even if you received on earlier in 2020. Independent contractors may qualify for forgivable loans. The Paycheck Protection Program (PPP) is back.
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