If you`re an independent contractor who has received a Paycheck Protection Program (PPP) loan, you`re likely wondering how to get loan forgiveness. The good news is that independent contractors are eligible for PPP loan forgiveness, just like any other business. However, there are a few things you need to know to ensure you`re eligible and that your loan is forgiven.
Here`s a step-by-step guide to help you get PPP loan forgiveness as an independent contractor:
Step 1: Determine your eligibility
To be eligible for PPP loan forgiveness, you must have used the funds for eligible expenses. Eligible expenses include payroll costs, rent, utilities, and mortgage interest. At least 60% of the loan must have been used for payroll costs. As an independent contractor, your payroll costs include your net income from self-employment, which is calculated by taking your gross income and deducting your expenses.
Step 2: Apply for loan forgiveness
To apply for loan forgiveness, you`ll need to complete the PPP loan forgiveness application. You`ll need to provide documentation to support your eligible expenses, such as payroll records, rent or lease agreements, utility bills, and mortgage statements. You`ll also need to provide documentation to support your net income from self-employment.
Step 3: Calculate your loan forgiveness amount
Your loan forgiveness amount will be based on the eligible expenses you incurred during the covered period. The covered period is the 24-week period starting from the date you received your PPP loan. If you received your loan before June 5, 2020, you can choose the 8-week covered period instead. To calculate your loan forgiveness amount, you`ll need to divide the total eligible expenses by 0.6 and multiply the result by your loan amount.
Step 4: Submit your application
Once you have completed the PPP loan forgiveness application and gathered all of your supporting documentation, you`ll need to submit your application to your lender. Your lender will review your application and determine your loan forgiveness amount. If there are any discrepancies or errors in your application, your lender may contact you for additional information.
Step 5: Await loan forgiveness
Once your lender has approved your application, they will submit it to the Small Business Administration (SBA) for loan forgiveness. The SBA will review your application and make a final determination on your loan forgiveness amount. If you are approved for loan forgiveness, your lender will notify you and your loan will be forgiven.
In conclusion, if you`re an independent contractor who has received a PPP loan, you are eligible for loan forgiveness. By following these steps and providing the necessary documentation, you can ensure that your loan is forgiven and that you don`t have to pay back the funds you received.