You want to try and use the seasonal employer formula or the new employer formula. One of those is what will probably get you the bigger loan amount. See discussion above for example 5 and example 6.

I’m not sure I understand your question. But if you’re saying you still owe $16 on your first PPP loan? I don’t think that’ll matter…

I think you do qualify if your Q1 drops by 25% or more. Sounds like it did.

The formula, in general, looks at 2019 compensation. But if you guys (both partners) earned $100K in 2019, that’s the amount needed to qualify for $20833 for EACH partner.

You should qualify. I think the confusion stems from the fact that they wouldn’t let you compare a partial 2020 Q4 to a full 2019 Q4…

I’m a sole proprietor one-woman shop and my yearly income is usually fairly consistent but definitely goes up and down and quarterly performance isn’t consistent. My customers have definitely changed their behavior due to covid; my overall revenue has gone down around 15-20% year over year. But the only quarters that meet the 25% requirement for me are Q1 2019 vs Q1 2020.

I usually bill clients at the end of the month, and so it’s hard to draw a direct line between COVID and the drop in payments I received in Q1. (Although it is possible I guess that news reports in February may have influenced some clients’ spending.) Can/Should I still apply for a second draw? I would be using it entirely for 2.5 months of ‘payroll’ to myself.

Thank you!

Stephen, thanks for the reply!

On the formula question, I suspect my example is as basic it gets. My wife and I are the two partners on this LLC with a 51/49% ownership split.

Q1 profit = $47k: or nearly $16k/month, or nearly $8k per person per month,

Doesn’t that put us each at roughly $20k each in the formula?

$8k per month x 2.5 months = $20k

If I’ve read correctly, isn’t $20,833 the max PPP loan payment for self employed?

Huge thanks!

I really appreciate your guidance regarding the PPP2 loan. If you are able to, I would be so thankful for any knowledge and guidance that you might have about my wife and I’s specific situation.

My wife started a first time self-employment contract on 2/1/20 with monthly invoices up until they terminated her contract at the end of August 2020. She qualified for PPP1 as not being in business in 2019 but yes in business by 2/15/20 therefore using the equation of Jan and Feb 2020 gross divided by 2 multiplied by 2.5.

From my reading of the PPP2 bill language, I believe she will qualify for that as well since she has no gross self-employment income in Q4 of 2020 due to her self-employment contract being terminated at the end of Aug 2020. In comparing her Q1 2020 to Q4 2020, she hits the requirement of minimum 25% reduction in gross income.

I think that the main question I have is how to correctly calculate the loan amount that she would qualify for. On page 2072 of the new bill, it looks like she would fall under the category of “new entity” since my wife’s self-employment “did not exist during the 1-year period preceding February 15, 2020.” I have the “sum of the total monthly payments” for her and then in section BB under new entities it states to use the sum of the payments divided by “the number of months in which those payroll costs were paid or incurred” multiplied by 2.5. She only had income/invoices from her self-employment from Feb 2020 to Aug 2020 which would amount to 7 months.

Would the loan amount that she would qualify for be her gross self-employment income (Feb to Aug 2020) divided by 7 multiplied by 2.5 or would we need to divide her gross by 12 months regardless of the limited months that she had this income?

Thank you Stephen for all your help!