Updated on June 5, 2020, for Paycheck Protection Program Flexibility Act of 2020 (see Insight 8 below).

1. Do I Have to Spend the Paycheck Protection Program (PPP) Loan Proceeds?

Yes, it appears so. The instructions for line 9 of Schedule A for the U.S. Small Business Administration’s (SBA) Form 3508 PPP forgiveness application state:1

Line 9: Enter any amounts paid to owners (owner-employees, a self-employed individual, or general partners). This amount is capped at $15,385 (the eight-week equivalent of $100,000 per year) for each individual or the eight-week equivalent of their applicable compensation in 2019, whichever is lower.

Note the word “paid.”

You may remember from Self-Employed with No Employees? Get Your COVID-19 Cash Now that the SBA in its interim final rule stated that your 2019 Schedule C net profit determines your 2020 payroll forgiveness amount.2 You don’t have to make a new calculation. You simply insert that eight weeks of 2019 Schedule C net profit on line 9, not to exceed $15,385.

But the forgiveness form appears to not simply give you a precalculated 2019 forgivable insertion in its line 9 of Schedule A. It contains ... Log in to view full article.