Does PPP loan forgiveness apply to sole proprietors and self-employed?

For sole proprietors and self-employed individuals, owner compensation is calculated based on your 2019 net income. If using an 8-week covered period, divide the 2019 net income by 52, then multiply that amount by 8.

Owner compensation for an 8-week period cannot exceed the amount of $15,385.00. If utilizing the 24-week covered period, divide your 2019 net income by 12, then multiply that amount by 2.5. Owner compensation for a 24-week period cannot exceed the amount of $20,833.00.

A new ‘safe harbor’ was established, creating two new exemptions based on employee availability in which a reduction in FTE employees would not affect a PPP borrower’s forgiveness amount. During the period between February 15, 2020, and December 31, 2020, loan forgiveness is determined without regard to the FTE employee reduction if a PPP borrower, in good faith, is able to document that (1) they cannot rehire previously employed individuals or qualified employees; or (2) they are unable to return to the same level of business activity that the business was operating from before February 1, 2020, due to compliance with requirements established or guidance issued by the Secretary of Health and Human Services, the Director of the Centers for Disease Control and Prevention or Occupational Safety and Health Administration relating to the maintenance of sanitation and social distancing due to COVID-19.