Customer Bank backs SBA’s enhanced support for sole proprietors, independent contractors, freelancers, and mom-and-pop businesses
READING WEST, PA – (BUSINESS WIRE) – Clients Bank, one of the top 5 paycheck protection program (PPP) lenders in 2020 and in the current federal stimulus cycle, has recognized that some of the smaller businesses, including sole proprietors, independent contractors, self-employed and mother-and-pop businesses, as well as those with an individual tax identification number (ITIN) continue to struggle to access the federal stimulus they need due to the method of calculating the taxes. PPP loan amounts.
In response to the Biden-Harris administration’s call to make PPP loans more equitable and accessible to these individuals and businesses, on March 3, 2021, the SBA announced a new PPP app that changes the method used to determine the amount of the loan. federal stimulus for sole proprietors. . For businesses with no employees, the calculation was based on a sole proprietor’s net profit, on line 31 of Schedule C. The new application will allow sole proprietors to choose whether they produce using net profits or using net profits. using the gross income, line 7 of Schedule C, to determine the PPP loan amount. The new application for sole proprietorships with employees similarly allows the loan to be based on gross income less reported expenses for employee benefit programs, pension and profit sharing plans, and salaries (appendix C, lines 14, 19 and 26).
“For many minority-owned businesses and those with ITINs, this change can amount to a difference of several thousand dollars,” said Sam Sidhu, vice president and chief operating officer of Clients Bank. “A sole proprietor who was eligible for $ 3,300 under the old calculation could now be eligible for a PPP loan of up to $ 20,833. Sole proprietorships – people who have a business without employees – should take advantage of this program and apply for a P3 loan. ”
The changes will allow for a more equitable distribution of federal relief funds to smaller businesses, many of which were overlooked by other lenders in early P3 loan cycles. Other important changes that only practitioners should be aware of include:
From February 24 until March 9, the SBA introduced an exclusive 14-day period for companies with 20 or fewer employees to submit PPP loan applications.
Legitimate immigrant entrepreneurs who reside in the United States and pay taxes will be able to apply.
Non-US citizens who have an Individual Tax Identification Number (ITIN) for their business can apply for a PPP loan.
First-time borrowers can apply for a second-draw PPP loan once the initial funds are spent and the required waiting period is met (currently 8 weeks but subject to change).
The SBA will now allow access to PPP loans regardless of the borrower’s federal delinquency status on student loans.
The PPP exclusion restriction for small business owners who have previously been convicted of non-financial fraud will be removed.
Loans can be canceled, subject to regulations.
It is important to note that borrowers who have already had their loan approved cannot increase their PPP loan based on these updated guidelines. The borrower can cancel the loan and reapply using the new calculations, but runs the risk that the loan will not be approved and funded before the scheduled end of the program on March 31.
To help small business owners gain better access to PPP loans, Clients Bank launched a white label turnkey PPP solution in January 2021 to provide a system for creating, financing and managing PPP loans. Currently, more than 300 banks and more than two dozen chambers of commerce and other similar organizations are benefiting from this program. There are thousands of small businesses at different stages of the application process in almost every state.
About the customer bank
Clients Bank, a subsidiary of Clients Bancorp, Inc. (NYSE: CUBI), a banking holding company, is a full-service super-community bank with assets of approximately $ 18.4 billion as of December 31, 2020. Member of the Federal Reserve System with deposits insured by the Federal Deposit Insurance Corporation, the Customers Bank is an Equal Opportunity Lender that provides a range of banking and lending services to small and medium businesses, professionals, individuals and families . Services and products are available wherever permitted by law through digital applications, online portals, and a network of offices and branches. Further information can be found on the company’s website, www.customersbank.com.