New Schedule C PPP Loan Amount Calculations

The U.S. Small Business Administration (SBA) announced non-retroactive changes in the way self-employed, sole-proprietor, and Schedule C applicants calculate their maximum PPP loan, regardless of whether the applicants have employees. Additionally, new PPP application forms have also been published to account for these changes.


Switch to Gross Income Method


Self-employed individuals who file Form 1040, Schedule C, Profit or Loss From Business, may calculate their maximum loan amount using gross income (Schedule C, Line 7) instead of net profit (Schedule C, Line 31). The change opens the door for larger loans to self-employed individuals, many of whom don’t record much, if any, net profit on their Schedule C. This election considers only the owner compensation piece of its payroll costs. Non-owner employee compensation is calculated in the same manner and form as before this change.


However, this change is not retroactive. The SBA and Treasury have ruled that borrowers whose PPP loans already have been approved cannot increase their loan amount based on the new methodology.


If a Schedule C applicant has employees, the applicant may elect to calculate the owner compensation share of its payroll costs based on either:


1. Net profit (Schedule C, Line 31), or

2. Gross income (Schedule C, Line 7) minus expenses reported on Schedule C:

a. Line 14 (employee benefit programs),

b. Line 19 (pension and profit-sharing plans), and

c. Line 26 (wages (less employment credits))


If a Schedule C applicant has no employees, the applicant may simply choose to calculate its loan amount based on either: