Self-employed people might regret getting one of the Small Business Administration (SBA) Paycheck Protection Program (PPP) loans.

CNBC reported these independent entrepreneurs who have borrowed from the PPP may not get the balance.

Under the CARES Act, companies do not have to repay the loan if they spent at least 75 percent of the proceeds on payroll and no more than 25 percent on other items.

If they can’t convince the SBA if they met these conditions, borrowers have two years to repay it at an interest rate of 1%.

The measure limits independent contractors and self-employed workers to borrow up to two months of their pay based on their 2019 tax return or $ 15,385, whichever is less, for forgiveness. Pension plan contributions and health insurance premiums are not refundable unless a business has employees.

The way the law is drafted, the pardon provisions are less generous for entrepreneurs who lack employees, the network reported.

“It looks like the self-employed will only get credit for their wages,” Greg Zbylut, tax attorney at Breyer Andrew in Burbank, Calif., Told CNBC. “We still have people who did not apply for the PPP loan for these same reasons. “

Another factor that makes Directive 75/25 impossible for self-employed workers who operate in cities with high rents, said Katie Vlietstra, vice president of government relations at the National Association of Self-Employed Workers.

“Rent and mortgage far exceed 25% of the costs for locations in cities,” she told the network. “They have a low payroll and high overheads. “

CNBC reported that the SBA expected the main costs for the self-employed to pay for themselves.

“Many self-employed people have low overhead costs eligible for rebate under the law,” the SBA said. “For example, many of these people operate out of their homes, vehicles or sheds and therefore do not incur eligible mortgage interest, rent or utility payments. As a result, most of their revenue will be net income.

But Dawn Minotas, CPA and general manager of Marcum LLP in Mayfield Village, Ohio, told the press service that her company anticipated these issues with the Schedule C applicants.

“Don’t ask for the maximum amount you are eligible for; apply for what you think you need, ”she said.

Zbylut said many entrepreneurs were afraid to apply for the second round of PPP financing.

“I think for the self-employed they had a bit of a rough deal, which couldn’t include health insurance or pensions,” he said. “We still need more details on this. “