Starting Wednesday, June 17, the Small Business Administration (SBA) and U.S. Treasury Department will begin offering automatic forgiveness for certain independent contractors and create a broader application form for the Paycheck Protection Program (PPP).
The updated forms clarify that the “owner compensation” amount automatically forgiven for borrowers who use a 24-week covered period, as opposed to the original eight-week period, is equal to 2.5 times their average monthly net income. Based on this, independent contractors with a 24-week loan can have the full amount automatically forgiven under the new guidelines. The amount of forgiveness for borrowers who choose an eight-week period remains unchanged.
Borrowers who received their PPP loans before June 5 can opt for either an eight- or 24-week period in which to use their loan; borrowers who received their loans after that date must use a 24-week period. The new forgiveness forms reflect a 60% requirement for payroll expenses, down from the original 75%.
PPP still has funding available, and the deadline to apply is Tuesday, June 30 unless it is extended by Congress.