Frequently Asked Questions About CARES Act Paycheck Protection Program (PPP) Loans for Small Business

Frequently Asked Questions About CARES Act Paycheck Protection Program (PPP) Loans for Small Business

Frequently Asked Questions About CARES Act Paycheck Protection Program (PPP) Loans for Small Business

Updated December 28, 2020 with information about new PPP loans included in the stimulus and spending legislation.

The Coronavirus Aid Relief and Economic Security Act (CARES Act) includes a number of programs to help small business owners, including Paycheck Protection Program (PPP) loans. By way of background:

  • The CARES Act which created PPP loans became law March 27, 2020
  • On April 23, 2020 Congress authorized an additional $310 billion in funding for PPP loans.  It was later extended through August 8, 2020.
  • On June 5, 2020 The President signed the PPP Flexibility Act, which changed some of the original provisions. 
  • On December 27, 2020 the President signed HR 133, the stimulus and spending package that includes new funding for PPP loans through March 31, 2021.

Please keep in mind this information is changing rapidly and is based on our current understanding of the programs. It can and likely will change. Although we will be monitoring and updating this as new information becomes available, please do not rely solely on this for your financial decisions. We encourage you to consult with your lawyers, CPAs and Financial Advisors. 

Do I Qualify for A PPP Loan?

To qualify for a Paycheck Protection Program loan for the first time, you must be a small business as defined by the SBA. This includes:

  • Small businesses or non-profit 501(c)(3) organizations with 500 or fewer employees
  • Small businesses, 501(c)(19) veteran’s organizations  or tribal concerns that meet the SBA size standards (See SBA size standards here.) 
  • Sole proprietors or independent contractors

Businesses in the food or hospitality industry (NAICS codes beginning in (72) may be eligible on a per location basis. 

In addition the normal affiliation rules are waived for franchises or businesses receiving financial assistance from a Small Business Investment Company.

The business must be in operation by February 15, 2020 and impacted by the coronavirus crisis.

Do I Qualify for a Second PPP Loan? 

To qualify for a second PPP loan, you must generally meet the qualifications above, plus:

  1. The business may not have more than 300 employees and
  2. The business must have at least a 25% reduction in revenues in at least one quarter in 2020 when compared to previous quarters (more details below)

Businesses with multiple locations that qualified under the CARES Act may qualify for a second draw provided they employ fewer than 300 people in each location. Affiliation rule waivers from the CARES Act still apply.

Learn more about the revenue reductions and qualifying for a second PPP loan here.

I Don’t Have Employees. Can I Still Qualify?

Yes you may. Self employed individuals and independent contractors may apply.   

How Much Money Can I Borrow? 

The basic answer is that the maximum loan amount is 2.5 times the average monthly payroll for the 12 months preceding the date the loan is made, up to a maximum of $10 million for first time PPP loans, and up to $2 million for second PPP loans.. Alternatively, businesses may use 2.5 times average monthly payroll for 2019. 

Use our free CARES Act SBA Calculator to see how much you may be able to borrow.

However, if you are a seasonal business, you can apply to borrow 2.5 times your payroll for either the 12-week period beginning February 15, 2019 and ending May 10, 2019, or the period of March 1, 2019 through June 30, 2019. Alternatively, the seasonal employer may use  any consecutive 12-week period between May 1, 2019 and September 15, 2019.

What if you are a newer business? If you were not in business for the time period beginning on February 15, 2019 and ending on June 30, 2019, then you can use your average total monthly payroll costs incurred from January 1, 2020 to February 29, 2020 and multiply that by 2.5. 

Payroll does not include waged or salaries above $100,000 or qualified sick leave pay under the Families First Coronavirus Response Act. That does not mean higher wages are completely excluded; it means that only the first $100,000 will qualify. (See What Does Payroll Include? below.)

Read: How to calculate your maximum PPP loan amount based on business type: self-employed, S or C Corp, Partnership, LLC or nonprofit.

I Don’t Pay Myself Payroll. How Do I Qualify? 

If you are self-employed you likely report your business income or self-employment income on Schedule C, which you file with your tax return Form 1040. If that’s the case, you can apply based on your net profit for 2019 (Schedule C Line 31). 

Read: Self-employed: How to Apply for PPP

Is This The Free $10,000 SBA Grant I Heard About?

No. The advance (or grant) of up to $10,000 is part of the Economic Injury Disaster Loan program, not Paycheck Protection Program Loans. Read about the EIDL grants here

Where Can I Get One of These Loans?

Individual lenders, including many banks, credit unions and some online lenders make these loans. You are not automatically out of luck if your bank can’t help you. You can apply elsewhere.

Nav matches borrowers to SBA approved lending partners.  Sign up for a free Nav account to be matched with lending partners making these loans.

Keep in mind that the cost is the same no matter where you get your PPP loan: 1% interest and no fees for any balance not forgiven.

What Can I Use the Funds For? 

You can use the loan proceeds for: 

  • payroll costs; 
  • costs related to the continuation of group health care benefits during periods of paid sick, medical, or family leave, and insurance premiums;
  • employee salaries, commissions, or similar compensations;
  • payments of interest on any mortgage obligation (but not to pay principal or to prepay a mortgage)
  • rent (including rent under a lease agreement); 
  • utilities; 
  • interest on any other debt obligations that were incurred before the covered period;
  • covered operations expenditure;
  • covered property damage cost;
  • covered supplier cost; or
  • covered worker protection expenditures.

What’s Included in Covered Expenses? 

These new categories of covered expenses were created by the stimulus bill but they are retroactive to any PPP loan not yet forgiven. 

Covered operations expenditures means “payment for any business software or cloud computing service that facilitates business operations, product or service delivery, the processing, payment, or tracking of payroll expenses, human resources, sales and billing functions, or accounting or tracking of supplies, inventory, records and expenses”

Covered property damage cost means “a cost related to property damage and vandalism or looting due to public disturbances that occurred during 2020 that was not covered by insurance or other compensation;”

Covered supplier cost means “an expenditure made by an entity to a supplier of goods  for the supply of goods that:

  • Are essential to the operations of the entity at the time at which the expenditure is made; and 
  • is made pursuant to a contract, order, or purchase order— ‘‘(i) in effect at any time before the covered period with respect to the applicable covered loan; or ‘(ii) with respect to perishable goods, in effect before or at any time during the covered period”

Covered worker protection expenditure means “an operating or a capital expenditure to facilitate the adaptation of the business activities of an entity to comply with requirements established or guidance issued by the Department of Health and Human Services, the Centers for Disease Control, or the Occupational Safety and Health Administration, or any equivalent requirements established or guidance issued by a State or local government, during the period beginning on March 1, 2020 and ending the date on which the national emergency declared by the President under the National Emergencies Act (50 U.S.C. 1601 et 8 seq.) with respect to the Coronavirus Disease 2019 (COVID–19) expires related to the maintenance of standards for sanitation, social distancing, or any other worker or customer safety requirement related to COVID–19; may include the purchase, maintenance, or renovation of assets that create or expand

  • a drive-through window facility;  
  • an indoor, outdoor, or combined air or air pressure ventilation or filtration system;
  • a physical barrier such as a sneeze guard;
  • an expansion of additional indoor, outdoor, or combined business space; 
  • an onsite or offsite health screening capability; or 
  • other assets relating to the compliance with the requirements or guidance described in subparagraph (A) as determined by the (SBA) Administrator in consultation with the Secretary of Health and Human Services and the Secretary of Labor; the purchase of— 
    • covered materials described in section 328.103(a) of title 44, Code 16 of Federal Regulations, or any successor regulation;
    • particulate filtering face piece respirators approved by the National Institute for Occupational Safety and Health, including those approved only for emergency use authorization; or 
    • other kinds of personal protective equipment, as determined by the Administrator in consultation with the Secretary of Health and Human Services and the Secretary of 4 Labor; and does not include residential real property or intangible property;’

How Fast Will I Have to Repay It?

If there is a balance left after forgiveness, the loan will have a maximum term of two years for loans made before June 5, 2020. Loans made on or after that date carry a five year repayment period. You can prepay at any time without penalty. 

What Is the Interest Rate and Fees? 

The interest rate for these loans will be 1% for all lenders that make them. Normal 7(a) loan fees are waived. 

Is there a Personal or Business Credit Check?

None is required. 

Is There a Personal Guarantee?

No. There is no personal guarantee required. In addition, these will be non-recourse loans as long as proceeds are used for covered purposes. (Non-resource means the government won’t be able to collect if you default.) 

Is Collateral Required?

No. Normally SBA loans for more than $25,000 require collateral. That requirement is waived for these loans. 

How Soon Do I Have to Start Making Payments?

As a result of the PPP Flexibility Act, payments are deferred until the lender receives payment for the forgiven amount from the SBA. If a borrower does not apply for forgiveness within 10 months after the covered period, the deferral period for the loan ends on the date that is 10 months after the last day of the covered period.

Do I Have to Prove I Can’t Get Credit Elsewhere?

No. Normally SBA loans require a “credit elsewhere” test to determine whether the borrower can get similar credit at another financial institution. This is waived here. 

How Do I Get Loan Forgiveness?

If you get one of these loans, you can request forgiveness of the principal portion of the loan for the 8-24 week period after you get the loan that covers:

  • Payroll costs
  • Interest on a mortgage
  • Rent 
  • Utilities 

However, no more than 40% of the forgiven amount can be attributed to non-payroll costs.

Your loan forgiveness may be reduced if you decrease your full-time employee headcount or decrease salaries and wages by more than 25% for any employee that made less than $100,000 annually in 2019. (Exceptions apply.) You may also receive forgiveness for additional wages paid to tipped workers.

In addition: 

  • Payroll includes the costs listed under the section “What Does Payroll Include?” below. 
  • Forgiven debt will not be taxable. 
  • The mortgage, rent and utilities covered in this section must be in place before February 15, 2020. 

Read: How to Apply For Forgiveness for Your Paycheck Protection Program Loan

Please note: there are specific and technical calculations included in this section of the law, and you should not rely on this description to determine whether to keep employees, reduce employee wages or to determine your eligibility for loan forgiveness. 

Do Independent Contractors Count as Employees?

No. Independent contractors can apply for a PPP loan on their own so they do not qualify for purposes of a borrower’s PPP loan forgiveness.  (Unless you are an independent contractor applying for yourself.)

Can I Get More Than One PPP Loan?

No.  If you are an owner in multiple businesses, please read: Can I Apply for EIDL or PPP for Multiple Businesses?

What Happens if PPP Loan Funds are Misused?

If you use PPP funds for unauthorized purposes, SBA will direct you to repay those amounts. If you knowingly use the funds for unauthorized purposes, you will be subject to additional liability such as charges for fraud. If one of your shareholders, members, or partners uses PPP funds for unauthorized purposes, SBA will have recourse against the shareholder, member, or partner for the unauthorized use.

Keep good records of how you use these funds. Sloppy record keeping may prove costly!

What Does Payroll Include?

The CARES Act states that payroll includes:

  • Salary, wages, commissions or similar compensation,
  • Payment of cash tips or equivalent  (based on employer records of past tips or, in the absence of such records, a reasonable, good-faith employer estimate of such tips),
  • Payment for vacation, parental, family, medical, or sick leave;
  • Allowance for dismissal or separation;
  • Payment required for the provisions of employee benefits including insurance premiums for group life, disability, vision, or dental insurance;
  • Payment of any retirement benefit;
  • Payment of State or local tax assessed on the compensation of employees; plus
  • For sole proprietors or independent contractors, wages, commission, income, or income from net earnings from self-employment, or similar compensation. 

It does not include:

  • The compensation of an individual in an amount that is more than $100,000 on an annualized basis, as prorated for the period during which the compensation is paid or the obligation to pay the compensation is incurred;
  • Federal employment taxes imposed or withheld between February 15, 2020 and June 30, 2020, including the employee’s and employer’s share of FICA (Federal Insurance Contributions Act) and Railroad Retirement Act taxes, and income taxes required to be withheld from employees;
  • Any compensation of an employee whose principal place of residence is outside the United States;
  • Qualified sick and family leave wages for which a credit is allowed under sections 7001 and 7003 of the Families First Coronavirus Response Act.

Are Employee Benefits In The $100,000 Salary Cap? 

No. The CARES Act excludes from the definition of payroll costs any employee compensation in excess of $100,00 on an annualized basis. According to the SBA, the exclusion of compensation in excess of $100,000 annually applies only to cash compensation, not to non-cash benefits, including:

  • employer contributions to defined-benefit or defined-contribution retirement
  • payment for the provision of employee benefits consisting of group health care
    coverage, including insurance premiums; and
  • payment of state and local taxes assessed on compensation of employees.

What Do Utilities Include?

Utilities include electricity, gas, water, transportation, telephone, or internet access for which service began before February 15, 2020. 

How Do I Document Payroll? 

You must submit such documentation such as payroll processor records, payroll tax filings, or Form 1099- MISC, or income and expenses from a sole proprietorship. For borrowers that do not have any such documentation, the borrower must provide other supporting documentation, such as bank records, sufficient to demonstrate the qualifying payroll amount. You’ll find full documentation requirements on the Paycheck Protection Program forgiveness application (Form 3508) instructions.

Are There Disqualifiers? 

Yes. You are ineligible for a PPP loan if, for example: 

  • You are engaged in any activity that is illegal under federal, state, or local law; 
  • You are a household employer (individuals who employ household employees such as nannies or housekeepers); 
  • An owner of 20 percent or more of the equity of the applicant is incarcerated, on probation, on parole; presently subject to an indictment, criminal information, arraignment, or other means by which formal criminal charges are brought in any jurisdiction; or has been convicted of a felony involving fraud, bribery, embezzlement, or a false statement in a loan application or an application for federal financial assistance within the last five years or any other felony within the last year; or 
  • You, or any business owned or controlled by you or any of your owners, has ever obtained a direct or guaranteed loan from SBA or any other Federal agency that is currently delinquent or has defaulted within the last seven years and caused a loss to the government.
  • The stimulus legislation also specifies that these loans are not available to businesses with greater than 20% ownership by “Chinese entities.” It also prohibits publicly traded companies from getting PPP loans.

What’s the Difference Between PPP and EIDL? 

The CARES Act includes a number of relief programs for small businesses. The one we are focus on in this article is Paycheck Protection Program Loans. The Economic Injury Disaster Loan is a separate loan altogether and you apply directly to the SBA, not to individual lenders. 

Can I Apply For PPP and EIDL?

Yes but you cannot “double dip” and use funds from both loan programs for the same purpose.

Can I Apply For This Loan and the Payroll Tax Credit?

There is a payroll tax credit of up to 50% of qualified wages for certain businesses whose operations have been fully or partially suspended by a government order or whose gross receipts in a quarter have fallen by at least half compared to a similar quarter the year before. 

Your business cannot receive both the Employee Retention Payroll Tax Credit and a Paycheck Protection Program Loan, so if you are considering both make sure you consult with your legal or financial advisor. 

However, thanks to the PPP Flexibility Act, businesses and self employed individuals may qualify for payroll tax deferral and PPP.



This article was originally written on March 30, 2020 and updated on January 20, 2021.

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638 responses to “Frequently Asked Questions About CARES Act Paycheck Protection Program (PPP) Loans for Small Business

  1. I was told I didn’t qualify for a PPP loan when the first rounds started because I was a sole proprietor, I had employees and did my taxes showing what I paid my employees. I became Incorporated in September 2020, am I still able to apply for a PPP loan or anything that helps a small business?

  2. Hello,

    I received a PPP loan through Cross River Bank as the lender and Scratch as the servicer. The loan has been completely forgiven, however as it states on Scratch’s FAQ page, they will report the loan to all commercial credit bureaus. Both companies have failed to do so. I have been working tirelessly to get this resolved, filed 3 complaints with 3 different entities the SBA, CFPB and the BBB. Any guidance/suggestions would be greatly appreciated.

  3. I applied for a ppp loan back on april 4, and it was smartbiz and customers bank. Well, I gave them a blank check like they had to have and I had said that the routing number on the check is not for ach transactions, please dont send it there.
    That is where they sent it and it was rejected by Bluevine. So, I was patient, nothing. Active unduspersed. Smartbiz wont even return my emails, on their end the loan says cancelled,but on caweb it says active undispersed. I have the note i signed, should i call an attorney?

  4. I received a 1st draw PPP loan through Smartbiz & Customers Bank. I applied for the 2nd draw and was approved by the SBA and given a loan number in April. I could not get in contact with either to move forward as it sat “Active-Undisbursed” on SBA’s Capitol Access Financial System portal. Now that PPP is over, the lender said they were unable to provide the loan for ID, manual fraud or documents needed, one of those reasons. How can I access the loan that is still active in my name at this point?

    1. Tracy – the SBA has opened a new PPP hotline. I’d suggest you try that. Call the SBA’s PPP customer service team at (877) 552-2692, Monday – Friday, 8 a.m. – 8 p.m. EST.

  5. Hello I would like to say that I love you guys for being so great to all over the world thank the good Lord for today I promise I would not let you guys down and I’m pretty sure we all feel the same I only have one question please as soon as possible I need to know how to change my banking information on application before I sign my in sign document they just came through today

  6. Hello Gerri,

    My lender is not responding to any emails and it seems that I have an E-tran number associated with and earlier ppp application that is preventing me from applying with another lender. Are there any steps that I can take to have my E tran number cancelled without going through the lender?

    1. Normally the lender cancels the loan in Etran. The only other suggestion I have is to try to get your district SBA office to help if they can. So sorry you’re having these problems. I know many lenders are working 24/7 to try to get these through – hopefully you’ll have some success soon.

  7. I am wondering if we can qualify for the first draw if our income does not meet the 25% threshold for Q4 of 2020? We are at 18% or so. Thank you!!

  8. Very thorough article! Thank you!

    I applied for and received the first PPP loan last year. I am self-employed (single member LLC) with 4 employees. My employees are all paid through regular payroll using ADP. Since I am not paid through ADP (I just pay myself from the income left each month), I never thought about adding myself as an employee. I learned recently that I could have used my schedule C net income, divided by 12, then multiplied by 2.5 – just like the regular PPP calculations for my employees were done – to include my own salary.

    My question is: is it too late to amend my PPP loan? Can I apply again for only my income?

    Thank you for your time,

    1. The SBA described the circumstances where a borrower can request a loan increase on their original PPP loan in this Interim Final Rule. It doesn’t appear that your specific situation is addressed there but I’d encourage you to read the IFR (start on page 73) and ask the lender who gave you your first PPP loan asap. Currently the deadline is March 31, 2021.

  9. My gross sales are up because my competitor closed and it’s caused me to not meet the 25% reduction, but we still lost money. Can I apply for a PPP2 loan?

    1. To qualify for the second draw PPP loan you must meet the 25% reduction in revenues in at least one of the comparison periods (or year over year). It is based on revenues not profit unfortunately. This article goes into more detail.

  10. We started a LLC in August 2019, opened business bank account, received startup loan , started making purchases , signed a lease and started paying rent in November 2019.. we had countless delays then finally opened for business April 2020…PPP , grants say – have Had to been in business as of February 15t 2020…Since we had all this activity in 2019 , are we considered in business to qualify for these services?? I can’t find an answer to this..
    Thank you

    1. I don’t recall seeing the SBA define “being in operation,” in that level of detail, but you do have to provide certain evidence that you were in business as of February 15, 2020 to the lender in order to qualify. You’ll see those requirements on pages 34-35 of this guidance. The requirements vary depending on how your business qualifies for PPP (as self-employed without employees, or with employees, for example.) I hope that helps.

  11. I don’t think it’s fair if line 31 on my schdule C is negative. Then I don’t qualify. I put everything into getting my business up and going. My start up expenses and Inventory Cost were more than I made in 2020. With all the social distancing rules and shutting everything down. Sales slowed down. I thought this is to help small businesses stay a float.

    1. From what I understand the new rules from the SBA say that you can now use your GROSS INCOME on LINE 7 of your Schedule C to calculate your PPP loan amount. Hope this helps.

  12. Hello,
    I did not apply for a ppp in the first round. I am about to apply. I have been in business since 2018. I did not have employees in 2019. I have employees now. Should I use what my payroll is now on my application? I plan on spending all of this PPP on future payroll. Thanks in advance for you thoughts!

      1. I really like you article help to understand more COVID-19 for my life and business is been very difficult Now that my mind my dad passed away I’m concentrating in my new goals and projects they approved me for forgiveness loan I have to find out about the first one, now I’m getting in my normal life I now I need some extra cash to keep going on with my new projects. Thanks for you information . Luz López

  13. I see in the ppp2 for second draw ppp the calculation has a step 4 in the bill that says to add the Eidl u would like to refinance to the loan total and subtract the Eidl grant advance amount from the total since you don’t pay it back. Does this make up for the first round when we had to subtract what Eidl loan we received from the ppp loan for the first round? I have not seen anyone but one person address this step 4 of the calculation for ppp. I also see it says for ppp the calculation could change to request more money according to the changing law in the bill?? Am I missing something? Is this not correct? It is clearly in the bill that I read.
    Thank you so much

    1. Yes it was in the original language and on the original applications. But note the very limited time period – EIDL loan made between January 31, 2020 and April 3, 2020 (not 2021!) that you seek to refinance. This applies to very few borrowers as few EIDL loans were made during that time.

  14. Hello!

    Reposting a question I had that I asked a while back, but probably too early. If there is no good answer, that’s fine, but I trust you opinion 🙂

    I had a question, I can’t find the answer. I’m self-employed with no employees, with an extremely seasonal business (99% of our revenue is in three summer months).

    In the first round, I did the Schedule C Net Income divided by 12, and got $X.
    Now, I realize that if I used the 12-week seasonal business window, I could get $5X, which would basically get me to breaking even for the year, which would be great.

    So my question – are those who are self-employed with no employees eligible to use the 12-week seasonal business time frame election? Or are we locked into Schedule C Income/12?

    Thank you so much!

    1. It’s a great question. If you qualify as a seasonal business it would seem you could apply as one, but I don’t see any specific guidance that gives the self-employed with no employees an alternative calculation other than net profit divided by 12 multiplied by 2.5 or (3.5 for 2nd draw loans for businesses with NAICS codes starting with 72). So I’m stymied like you are. I’ll keep my eyes open for any updates.

  15. Hello,
    I have a small company in civil engineering.
    I like to get in touch with Gerri Detweiler for some advice on improving my credit scores.


  16. Glad to see this updated! This post helped me a TON back in April.

    I had a question, I can’t find the answer. I’m self-employed with no employees, with an extremely seasonal business (99% of our revenue is in three summer months).

    In the first round, I did the Schedule C Net Income divided by 12, and got $X.
    Now, I realize that if I used the 12-week seasonal business window, I could get $5X, which would basically get me to breaking even for the year, which would be great.

    So my question – are those who are self-employed with no employees eligible to use the 12-week seasonal business time frame election? Or are we locked into Schedule C Income/12?

    Thank you so much!

    1. Hi Paul – I am so glad to hear you found it helpful. Short answer is I don’t know yet for the self-employed. I think we need guidance from SBA and hopefully this time it will come more quickly. (It’s also not clear how the self-employed who want a second loan will calculate the 25%.) My best suggestion is to make sure your bookkeeping is up to date so when the SBA comes out with the regulations you’ll be ready! I will continue to update articles as we learn more.

      1. Hello Ms. Detweller,
        Thank you again so much for this article! I’m getting ready to do my application, and I was just curious if there has been any guidance on this? I’ll try to do my best on the application, but want to try to do it “right” if possible.

        1. I’m sorry the way these comments work I don’t know what guidance you are looking for. Can you submit a question with your full question? (No new guidance has come out since this story was last updated.)

  17. 1 more log on the fire. I too am a commision based earner. Where I think I may be different from some others, of course not sure, is that I am a W-2 employee, not a 1099er. I have tried to get input from the SBA and gotten no response. I spoke with a few business accounting firms, both friends and friends of friends. I hear a lot of ” sounds like double dipping to me” when I pose my situation.
    My drew verses commision weekly check has been $1,700 per week for the last 11 years. I earn considerably more then that and every quarter we settle up. 99 times out of 100 I am owed money and my boss pays me promptly. So, covid hits. I am put on unemployment and understandably so. We are in the restaurant supply business so business went off a cliff. My boss files in round 2 for PPP and gets it. I have to assume he put my payroll expense at the max of the 100K ceiling and for 9 weeks I was off unemployment and got my full $1,700 a week. As we looked at my first dismal 6 month production at the end of June he said I was paid by the company for 21 weeks. That the half year minus the 5 weeks I was on unemployment for 5 weeks before the govt. money arrived. My contention is although the “payroll check” came from my company it was funded by the feds to make me and other W2 employees of the company whole. I say he paid me for 12 weeks against my earned commision.The office people did not have to payback the boss regardless of the severely reduced hours they worked and minimize production when they worked as salaried, not hourly people. As others have expressed he is telling me I owe the company that money, $15,300 in my case, against future commissions earned. I’m sure his goal is government loan forgiveness. I don’t know if he got it yet but he’s a smart guy. So he gets a loan, pays me under program guidelines, gets the loan forgiven, and I owe him 15,000 bucks of my earnings. The govt. $$ was a program to make ME whole. Looks like he gets the 15 grand in his interpretation of this, not me. I’ve read repeatedly your advice as to who to call. Can I ask your personal view as to which side of this story your thoughts lie? I see it as classic double-dip-syndrome.

    Thank you

    1. I’ll be honest Lou – I don’t think Treasury or SBA thought through scenarios like yours and so my guess is you won’t get specific guidance for a situation like yours. Your options at this point as I see it are to:

      1. Contact your elected officials in Washington and see if you can get one of their staff members to help you get a specific answer from SBA. (They have staff that are supposed to help constituents having problems with government programs). I’d say it will be a matter of luck as to whether you find someone who can really go to bat for you.
      2. Contact the U.S. Department of Labor and/or your state Department of Labor as this is a wage issue. But understand it may raise issues with your employer.
      3. Contact an employment attorney.

      I wish I could give you a clearer answer but I haven’t seen any scenarios in the guidance that fit your situation. You’re not the only person who has written with a similar scenario unfortunately.

  18. I work for a car dealership in sales. We were paid $300 each week from the stimulus my employer received. Now that we are selling a small number of cars again we are being forced to pay back all of the PPP payments we received during that time period. Is my employer allowed to take back any stimulus funds they distributed to employees?

    1. That sounds like a wage issue. I’d suggest you’d contact your state department of labor or an employment attorney. (That specific issue is not addressed in the CARES Act which created the PPP loan program.)

    1. Are you asking about PPP? If it is forgiven it may not appear on the credit report. Given we are at the beginning of the PPP forgiveness process, it is my understanding that it is unlikely any have been reported yet. You may want to reach out to your lender to inquire about their policy.

  19. My question is similar to “ Big K’s” (posted June 2020) I work on commission. I received PPP money as Salary for 8 weeks/No commission on my sales. My company said the same thing. They will figure out what my commission was and deduct what they paid me to c if I owe them or they owe me
    I called the labor board. They told me that’s not a labor issue. How do we find out if this is correct?
    How do we know that our employers did not apply for and were granted loan forgiveness and are now making us pay back the money?
    I’ve called the SBA I’ve called the labor board and I’ve emailed the US consumer affairs

    1. I’d suggest you talk to an employment attorney if your state department of labor can’t help. Sorry I can’t be of more help but this is not specifically addressed in the CARES Act.

  20. I am a self employed dentist and do not have employee of my own. Do I need to choose zero or 1 employee while filling the ppp loan application? There are some lender’s applications that do not allow putting 0 as number of employee. Your prompt response is greatly appreciated.

  21. I work sales at a car dealership we have been getting paid with the stimulus money for the past two month, Im working my full schedule while selling good amount of cars my employer has not paid me any of the commission on them, just the stimulus money. Do they have the right to keep the commission I should of made on the cars sold during the last two month and just pay me with the stimulus money? they said that at the end of the stimulus checks they will take what we should of made on all the cars we sold during that time then take what they paid us in stimulus an pay us the difference if we made more. so long story short they wont pay us what we should of made on the cars

    1. That’s more of a labor law question and I don’t know the answer. You’ll need to review your employment contract and reach out to your state Department of Labor or an employment attorney.

  22. Thank you for this article! We have our PPP loan, and we set up a new business account with only the PPP funds in it. The first month’s payroll just pulled, however it also included some non covered costs- the employer side Federal taxes. I didn’t even think of that. What will the ramifications of that be on loan forgiveness? Would it be prudent to transfer some money into the PPP account to offset the employer side taxes? Thank you so much.

  23. I reserved a $1000 from sba and fund out about it
    When I balanced my check book this week. I then reserve a email Friday saying I got it a month later.
    I am a self employed freelancer collecting unemployment from Minnesota, do I claim it now on my unemployment this week?

    1. Jim – you need to talk with your state unemployment office. They administer unemployment and would be in the best position to answer your question. (Sorry – I know it’s not easy to get through to many of them!)

  24. Do employers need to retain their employees in order to benefit from the cares act? And how long must they retain them, if true?

  25. My son is a chef at a restaurant in a resort town. The business god a SBL through the CARES program. They said that the employees would have to have 30 hours a week to remain on the payroll. But, they are only doing carry out and delivery, so there aren’t that many hours to make 30 hours a week. Is that true? Can they do this? Thanks, just curious.

  26. I got a PPP loan of pay back rent and utilities on the building I’m leasing for my business….can I apply for unemployment benefits for my personal finances?

  27. Please expand on “transportation “ as an allowable cost. What items are included? Vehicle costs for instance? Insurance, fuel, maintenance,, depreciation to name a few.

  28. My company got the loan but only paying us for hours we worked not the full40 hours . Hours were cut back so we can’t even work 40 hours . Can they do that?

  29. I am a partnership we will b getting back to work however My staff is not needed full time because of loss of consumers
    we received our ppp loan which was based on staff working full time. this will affect the loan
    am i able to use the remaining balance for a pump t for me and my partner

  30. Would you happen to know what are federal contracts obligations for payroll employees during covid-19 for contractors, if we received the loan? We have Federal contract in Utah, they closed couple of buildings and are requesting we pay 4 of the employees whom worked the building. However, I’m not sure if we are obligated to pay or not. Can you please shine some light my way ?.

    1. The PPP doesn’t require an employer to pay anyone. It simply offers forgiveness for certain uses of loan proceeds. It sounds like you need to understand the requirements of your federal contract which is a separate issue. I’m sorry we can’t advise.

  31. Have received PPP loan funds. My company is a S-corp with 2 employees, work from home, and have very little in the way of rent, utilities, etc. Can I increase salaries so that 100% of the loan is used for payroll and still be eligible for forgiveness? The increased salaries would still be no where near the $100k cap. Thanks

      1. Since the PPP loan amount was based on a 2019 monthly average pay( x 2.5 ), don’t we have to stay within that average during the covered period? I am an s-corp as well with only myself on payroll. I received around $15,000 because I showed that my 2019 monthly average pay was $6000, which is why I thought I received $15,000. Thanks!

  32. I am an employee, and my employer received a PPP loan. They are requiring us to return to work, for the average hours we worked the previous year, all be it, we can do it online or at work. Take in mind, this is a restaurant, and I am paid minimum wage, which is what is being offered as my pay for the hours ($13/hr), and I make more like $35/hr with tips. Can they require me to work my average of 26 hours/week? Further, wouldn’t I then lose my Unemployment, because I am now working 26 hrs/wk? even though I am not being paid the amount I used to make.


    1. Our boss brought us back under his PPA loan at first he was paying us but we averaged out before the Covid and keeping all our charge tips now that we are complaining about our charge tips he is only paying us 555 an hour even though we only have an outdoor seating which has nine tables we are not making what we used to can he do this

  33. My company received a PPP loan. It was used appropriately. Now one of my employees must take a leave as his young children are out of school and he has no one to care for them. Can he still qualify for the new leave act at $200 a day or will this affect the PPP loan.

    1. Pat – According to the Interim Final Rule, “the CARES Act excludes qualified
      sick and family leave wages for which a credit is allowed under sections 7001 and 7003
      of the Families First Coronavirus Response Act (Public Law 116–127). Learn more
      about the Paid Sick Leave Refundable Credit here

  34. Received my PPP loan. We are a C-corp with only two employees. Work from home with basically no utility expenses for the company. To use all of the PPP funds withing the 8 week period can I use 100% of the funds for payroll by increasing salaries?

    1. I haven’t seen any guidance that would seem to prohibit that but I can’t guarantee you’ll be fully eligible for forgiveness. Still waiting on full forgiveness guidelines from Treasury and SBA.

  35. Hi. I work for a small business who received this loan but I have not received any assistance. I did not apply for unemployment. My brother works for a business in the same neighborhood and has received multiple checks from his employer. My employer has not paid anyone but did offer a few shifts to be worked. Should I be receiving a check as well? They said they are using it for rent and other bills. Any information would be helpful.

    1. If your employer is not trying to qualify for forgiveness then it appears they can use it for other purposes. If they are not going to pay you, you may want to look into applying for unemployment.

  36. I received PPP as an independent contractor, self employed as a consultant in the travel industry. I receive a check once a month from the company I consult. To keep records to request loan forgiveness, do I write myself a payroll check for salary? Everything that I earn is my payroll, business expenses are covered.

    1. From this
      Treasury and SBA guidance it appears that you can use the Schedule C you used to apply when applying for forgiveness but we don’t have additional information. (Be sure to pay attention to the part where it talks about calculating forgiveness as 8/52 for owner’s compensation.)

    2. If I closed my business last year will I qualify for ppp or any help from the cares act to restart another business? If so which do I apply?

  37. what if I am still working but only making a percentage of my previous wages? does my boss get to pay me the money i lost since the shutdown?

  38. We have several people we use full time through an employment agency. Our bank had us include them in the calculations for the loan and asked us for the 1099 we sent to the agency. Not all of our permanent employees are returning, are we able to bring on additional people through the agency and count them in payroll and in the employee count? If so what documentation would we need since a 1099 would not be issued until year end. Thank you.

  39. I belong to a gym that has been approved for a PPP loan. They have been deducting the monthly membership from my bank account. Are they still supposed to be charging their members?

    1. Hi Lisa, you will need to review your contract with your gym and speak with the them to determine whether or not you can expect them to continue to charge for membership dues.

  40. We have 3 employees who have not been working since 3/23 but have continued to get paid. We now have the need to have them come back to work. We just received our PPP loan. If they refuse to come back how is this handled. Someone said you still need to pay them 80% of their wages regardless if they come back. Others said if they refuse to work then they can resign. The only issue would be is the amount of the loan forgiveness would decrease by the salary you are not paying them. Is there any guidelines listed anywhere ?

  41. We own a small business with 2 employees. We just received our PPP loan, have very little overhead, and I just figured out that after being approved for the standard 2.5 times monthly payroll amount for our loan, I will only be able to use approximately 85% of the loan amount. 80% of the loan will go to payroll (so will meet the 75% payroll threshold for forgiveness), and maybe 5% for utilities. Unless I raise payroll we won’t be able to use the last 15% of the loan since we don’t have any other approved uses of the loan money. Do you know if there penalties of any sort for not using the full amount or for returning a small portion of it? Thanks!

  42. The small non-profit I work for has received a PPP and set up the money in a separate account from the one normally used to make payroll. We use quickbooks for all payroll and expenses. I am new to quickbooks and am trying to figure out how to add this new bank account to our existing company to make payroll out of it.

  43. We are a small business so we do not offer any paid sick leave or personal time off. Our employees are paid hourly. Since we received the PPP loan, do we have to pay them a full 40 hours per week even if they actually worked less hours?

  44. Hi Gerri! Thanks for the great article. I was laid off for 2 weeks due to the covid19, I did not apply for unemployment, then the company I work for was approved for the sba loan and they called me back to work, are they required to pay back pay on the 2 weeks I was laid off?

    1. Sandy – not that I’m aware of (it certainly isn’t a PPP requirement) but you may be eligible for unemployment for those two weeks. You may want to check with unemployment.

  45. If I am qaulified for PUA as Sole proprietor from March 14 until May 4 (when i qualified for PPP), is it ok to still get PUA from before the 8 weeks prior to getting funds of PPP then after it runs out I can go back on PUA as long as I dont get threm both concurrently?

    1. I mean my business stopped March 14th through now, but have been approved for PPP May 4..Can I get PUA retroactively before PPP was approved, and then again after 8 weeks of PPP?

      1. Rob – It seems to make sense and we hope the SBA and Treasury will issue guidance on that but they haven’t yet. In the meantime your state unemployment agency would be the best resource, though we understand how hard it can be to get an answer.

  46. hi i drive for a company, i usually get my 40 and overtime. but since COVID-19 I have been getting 30-35 hours a week. my company has just got the PPP loan, and they are saying i MUST stay for 40 hours. so if im done with my job early i cant go home? it was just frustrating cause when i did come back early i was told to go home. had to use 2 personal days and lost about $100. a week…..hopefully essential workers will be taken care of

  47. When I look at what utilities are included, it doesn’t specify on trash or pest control is that included too?

    What Do Utilities Include?
    Utilities include electricity, gas, water, transportation, telephone, or internet access for which service began before February 15, 202

  48. If someone works as a W2 employee and gets UI determined on those contributions, can they also get the PPP loan for the other half of their income which is 1099 work?

  49. Hi- My restaurant was just notified we did receive the PPP today but our lease is over July 1st and we need to relocate the restaurant and we are not sure when we will be able to open for sure. Should we not take the PPP loan offered? We are not sure what to do because we can’t start using it right away for 8 weeks in a row.

    1. Jennifer – Keep in mind the main goal of PPP is to keep employees on payroll and if you don’t think that makes sense it may not be right for your business. Do you have an accountant or similar advisor you work with who can review your specific situation and advise you? Another option would be to talk with your Small Business Development Center (SBDC).

  50. I pay my workers by the hour. Some of them get paid $62/hour and end up making more than $100,000 per year. During the eight week PPP period I know I have to lower their hourly wages so I do not exceed the annual salary of $100,000 set by the CARES Act. What is the highest hourly wage I can pay them? Thank you!

  51. I need to find out how to pay one of the PPP loans I received. I had two deposited into my account today and I NEED to return one. I can’t find an answer anywhere on the SBA site and all I get are auto replies. Please help

  52. Hi,

    I filed for unemployment when I was let go and a month later my boss told me that they got a PPP loan and I was paid retroactively for the month that I had filed unemployment for. I’m not sure I would be able to be hired back after the time period, my work is in travel and there’s not really a lot of work happening at the moment.

    Additionally, I was a recent hire at the company and had only worked there 2 months when this happened so I didn’t think that this job counted towards my unemployment. To complicate matters, the job is remote and the company is based in a different state than where I live. When I filed for unemployment, I only entered my previous employers within my state (since the most recent job was so short and in a different state).

    What should I do regarding unemployment?

    1. It’s definitely a complicated situation and I don’t have the answers. It’s really an unemployment question and you’ll have to deal with unemployment to get an answer. I know it’s hard to get through to them these days and wish I could offer more advice but each state handles unemployment differently. This article may provide some resources: FAQs about unemployment for the self-employed

  53. If I already received a PPP loan and then a few days latter a second one, can I use the second PPP loan for other business related expenses since the first PPP loan was already used for Payroll?

    1. George – The CARES Act is clear that a business can only get one PPP loan. Did you apply using different EINs? Do you have multiple businesses? the SBA system should have kicked back the second application if it was for the same business.

  54. My employer got approved for the PPP this week but when it came to pay day on FriI was still paid the Reduced hours I worked this week. And is saying I can’t file for unemployment for this week because they got the PPP. Do I still file for unemployment for this week since I was paid for reduced hours? They are saying they will not pay us for 40 hrs if we don’t work 40hrs

    1. You may be eligible for partial unemployment if you have reduced hours. Unfortunately unemployment is administered by states and you’ll have to ask them. (Easier said than done I know!)

  55. Do employees still get the $600.00 when they are called back to work due to the PPP my company received? This is causing me problems upsetting part time employees that are making much more being unemployed. Some of them work less than 20 hours will they get under employment? Thanks

  56. I have all part time workers, does the ppp still cover only part time workers, to receive the forgiveness , as long as I keep them on payroll

  57. My husband is a W-2 employee and he is a self contractor (sole proprietor) for a consulting business. He was laid off by the W-2 and collects unemployment. Can he still use the PPP funds for His own payroll and get unemployment for his W-2 job?

  58. My business only got $6,300 in funds. I’m the owner and the only employee on payroll. My business it’s been close for the last 2 months so I’m collecting unemployment. I owe rent and utilities which total close to the 6k. Can I use those funds to pay rent and utilities only ? I know I will have to pay it back but I just want to make sure I won’t have any problem if I don’t use the funds for payroll.

    1. Max,

      We can’t provide advice for specific situations. I can share the Cares Act and refer you to Section 1102 which lists the acceptable use of these funds. Rent is among them. Also, we haven’t seen clear guidance on how unemployment and PPP interact.

  59. Hello, I am a sole proprietor and my business will remain open but anticipate sales to slow in the next week or so because shipments have been drastically delayed. Can I apply for PPP? If so, will I be able to get the loan forgiven if I paid myself? Thanks for any info you can provide.

      1. Can you accept a ppp loan while being on unemployment? But you choose to take the loan because it’s only 1% and intend to pay it back within the 2 yrs. And will it hurt your unemployment benefits by doing so?

      2. Hello I want to apply for ppp loan I’ve been self employed for 6 years now. I have no employees and I have no bank statements what do I do ? Or since I don’t have a bank statement or voided check can I not get loan?

  60. Hi Gerri, Thanks for your article. It is very informative. Gerri, I own a business which is a single member LLC. The LLC chooses to be taxed as a corporation. The business has existed since 2016 and there are three employees (myself and two others which are not related to me). My wife and I own the office space where the business is located and the business pays rent to my wife and I. We have a signed lease agreement dated in 2016 and renewed in 2019. The lease is at market rates and we pay the lease monthly. Do you think my lease payments (rent) will qualify as a use of the PPP loan proceeds?

  61. Please define transportation and telephone. I was told cell phone expenses are part of telephone. Is that true? What is included in transportation?

    1. Keana – We try in these articles to provide information from the CARES Act and subsequent guidance from the SBA and Treasury but we can’t speak for them. I don’t see why a cell phone used in a business would not be considered a telephone expense, but this legislation was written and passed quickly and not everything is spelled out. There was some discussion of this in the SBA supplement to the Interim Final Rule if you want to check that.

  62. Reduction Based on Salary for Forgiveness: Has there been any more update or clarification on this subject? If I pay the same hourly rate for 40 hours, is that good enough? If the employee worked a lot of overtime hours in the previous quarter, and during the 8 week period, I pay the employee straight 40 hours only at same hourly rate, do I have to worry about being 25 % under?

  63. Is it possible to use the Employee retention credit for payrolls prior to our PPP acceptance letter? I realize they can not be run simultaneously however it doesn’t sound like PPP can apply to prior periods and we have not received funds yet.

    1. Janet – You may want to discuss the following with your tax professional:

      If you read the CARES Act, it states under SEC. 2301. EMPLOYEE RETENTION CREDIT FOR EMPLOYERS SUBJECT TO CLOSURE DUE TO COVID–19: (j) Rule For Employers Taking Small Business Interruption Loan.—If an eligible employer receives a covered loan under paragraph (36) of section 7(a) of the Small Business Act (15 U.S.C. 636(a)), as added by section 1102 of this Act, such employer shall not be eligible for the credit under this section.

      Section 1102 is the Paycheck Protection Act. You can read the CARES Act here.

  64. Hello,

    My employer laid us off on March 19th and directed us to apply for unemployment. I got a call on April 17th saying they were getting the PPP loan and they may pay us on April 24th. I had been on unemployment before this. We did end up getting the payment from my employer on the 24th but we have not been asked to come in and work. How do I report this on my weekly claim to unemployment? Would it be considered a severance payment? Can I still receive unemployment?

    On my weekly unemployment claim there is no option for reporting this. It only asks if we worked. And on the pay stub I was sent it says the pay period was for 4/6 to 4/19 but I already filed claims for those weeks before I even knew about this. Will I have to pay my UI benefits back? My state is saying that benefit wage charges from the employer are waived.
    Help I am so confused and worried.

  65. So I’m still working but my hours have been reduced due to Covid-19 so my employer filed for assistance.  From this he is getting assistance to help pay for my commission paycheck.  He told me that he will get $1275 assistance per pay period to help pay for me.  However, my commission pay will actually be slightlly higher than that at $1330.04 for this upcoming pay period.  Does my employer still receive the $1275?  Or is the $1275 only given if it is needed.  For example if I make only $1000 for a pay period does he get helped out with the remaining $275? Or does he get the full $1275 no matter what?  I’m just curious as I’m trying to justify still having to pay for babysitter bills for my kids while working my extra time for my commission pay check that I may not actually have to currently be working.  I’m not a free loader by any means and I’ve never personally taken any government assistance but I’m trying to figure out where the money is going as it may be more logical for me to not work my commission pay structure now as I basically break even on what I have to pay for a babysitter vs what I’m actually bringing in with my paycheck.  Could my boss just be pocketing the money for himself?  Thanks. 

    1. Kyle, I’m not sure I fully understand the situation. You may want to read our article to better understand how forgiveness works. If you are owed a certain amount in commission but your employer pays you less than you are owed that would seem to be a labor law question not a PPP question. You may want to contact the Department of Labor either on the state or federal level. How to Apply For Forgiveness for Your Paycheck Protection Program Loan

  66. If my employees were on unemployment and I got the PPA loan to pay. them their regular payroll amount, can they still receive unemployment

      1. We did apply but was told we do not qualify because we had zero profit last year. We are a new business as of July of last year so yes we did not make an overall profit which is very common for a new business. Does this seem correct?

      2. I’m a brand new business and was starting my busy season. I don’t have a lot of the documentation they are asking for? How do I get around that if I’ve only been in business a short time?

        1. When did you start your business Sandra? What is your business structure? Sole proprietor or something else? If you started it in 2020 and file Schedule C the SBA and Treasury have not released any guidance yet on how to calculate eligibility unfortunately.

  67. what happens if you submit an estimated schedule C because your 2019 1040 is on extension and then later – the schedule C actually filed with the return is different.

  68. As an employee, can I find out if my employer (owner) received a Ioan from the PPP?
    Is there a website or an office that I can contact to learn if my employer received money from SBA?

  69. The lawyer I have an agreement to do legal work for runs the payroll of my paralegals through his law firm. he get s portion of collect fees for handling all the advertising meetings website set up etc. He used the cost of my paralegals’ salary as a basis to get a CoVID Loan for the cost of my paralegals payroll. Through our agreement I have with him I independently pay the cost of that payroll ( and other expenses) prior to receiving the balance of collected fees ( after payroll and other expenses).He told me he needs to keep some money aside in case he needs to pay his mortgage because his finches are hanging by three for the stock market. Isn’t this fraud on the other attorney part because he is essentially making me pay him the money he got for the government to cover the payroll?

    1. I don’t know Andrea. PPP funds may be used up to 25% for mortgage interest, utilities and rent. If he is paying the payroll then I assume he can apply on that basis. But you may need to get legal advice on this one.

  70. Can an employer cut employee hours by 25% after receiving a PPP loan?
    Sounds like a possibly if I read the terms correctly.

  71. My husband got laid off due to the coronavirus and then his job was granted PPP. They were put on work from home. Now the employer is making them go to the workplace and do trainings there. Is this legal?

    1. This issue is not addressed by PPP. It’s really a labor law question and you’ll need to contact your State Department of Labor for more guidance. I’m sorry I can’t be of more help.

  72. Thank your for the article. Is it a guarantee the loan gets forgiven? For example, y dad owns his own transportation company. He’s the only employee and pays himself. Can he get the loan to pay himself up to his highest earnings of 2019 quarter 2 and then get that forgiven? Can he pay mortgage of his own home with it?

    1. Hey Gerri, thanks for the help on this subject it is much appreciated! So, my wife works for a restaurant that just got approved for a PPP grant, they are now calling her to come back to work, but as of right now they are only doing To-go orders because of California’s Stay at Home Order. She had expressed concern for coming back so soon and had asked how they would be working while the dining and bar are still closed. She was leaning towards not going back just yet, so they sent her a “change of employee relationship” form that they want her to sign ASAP. I’m assuming if she signs this she will no longer qualify for unemployment? I’m also curious if the Stay At Home order effects this situation at all. As of today, it has not been extended past May 3rd in our county, but much like the Bay Area that just got their’s extended until May 30th, I’m expecting this to happen. I’m wondering, does she necessarily have to sign this document? Also, if they are basing the schedule off of restrictions being eased, and then they are not loosened at all come May 3rd, I don’t see how they can possibly offer her more than 8-16 hours a week. Is the PPP used to cover the hours she normally would get? Sorry, I know that’s more than one question. Thank you in advance, have a great day!

  73. Hi, I am a part time employee in a dental office. Only emergency procedures are allowed to be performed. The owner of the office got approved for the PPP loan. Do I have the right to get pay?Thanks

  74. I am a hotel bartender who was laid off on March 22 due to COVID-19. My employer has received the PPP loan and is recalling us and reinstating our tenure and benefits. However, they are paying us $15 an hour to perform cleaning projects and other duties until our restaurant and bar is able to reopen. I claim all credit card wages and they are documented on my W-2. Also, my claimed tipped wages are far more than the hourly they are paying us. Are employers required to factor in tipped wages when factoring their payroll costs, or are tipped wages factored at their discretion?

      1. As far as forgiveness is concerned I received my loan on April 27th what date do I go back to to determine the forgiveness of payroll I closed my business March 24th? Does that mean I will get from March 24th until approximately June 7 I’m also seeing February 15th till June 30th in some of the literature.

        1. Steve,

          Your 8-weeks started on April 27 to document how you’ve spent that money. Make sure you’re keeping track so you’ll be successful when you apply for forgiveness with your lender.

  75. It does not talk about part-time employees. Does the employee have to be full-time for their wages to be included in the forgivable portion of the PPP Loan?

    We hire a maintenance company to maintain our elevator and a gardener to mow our lawns. Are any of these condered Utilities that can be forgiven in the PPP Loan?

  76. Good afternoon and thanks in advance for any assistance.

    My company recently got the PPP loan and I have questions regarding how they are using the funds. All the employees of the company are sales reps essentially and paid through a draw program normally. To clarify we each get paid around $1235 biweekly in a draw and then when we make commissions we pay this draw or “loan” back to the company and then get the additional commission on top of that.

    For example if I personally didnt have any commission for 4 weeks I would owe the company $2470 ($1235 every two weeks). So when I had a sale pay out and would make $5000 off of it I would first pay back the company the $2470 and then get the remainder $2530 as my pay.

    Anyway, currently the companies plan is to pay employees with this PPP money as a larger draw for each pay period. Over the 8 weeks it would be about 16k total or 4k per pay period. This would mean however that the employees arent benefiting from this PPP grant in anyway because they technically are having to pay this back to the employer before actually making commissions. This seems like a loophole where the company can get this extra money for free by paying it out in payroll without taking it as loan and not truly helping their employees out. This money once it gets paid back from sales each employee makes gets put into the companies profits now. It seems like this should not count as the grant part and have to be paid back since the money goes to the company then instead of its employees. Is this actually allowed? Are there any guidelines currently that prohibits this to qualify for the grant portion?

    Thank you again for any information you can provide. I also realize this might be confusing typed out and would be happy to provide any additional information.

    1. That’s a very interesting situation Sammy. My gut says that’s not how it’s supposed to work (pay you, get it forgiven, you pay it back to them later) but I’m not an attorney and I have not seen it addressed specifically in any guidance. I would encourage you to contact your elected officials in Washington. This is a federal program and guidance for questions like this are needed. Will you let me know if you find out anything interesting talking with them?

      1. Thank you! I tried to email the SBA help desk about a week ago but havent heard anything yet. How else could I go about contacting someone?

      2. I have a very similar situation in that I am a commissioned salesperson who receives a weekly draw against anticipate commissions . the draw is in the form of a weekly paycheck and is reconciled quarterly. I receive a W2 every year, not a 1099. My employer received a PPP loan and continued to pay the draw weekly as usual, which has been very appreciated, but he has recently indicated that we salespeople will still be responsible o cover the entire 12 weeks of the quarter, rather than deducting the 8 weeks covered by the PPP. This seems to me to be a dishonest form of ‘double dipping’ on his part, having received the money from the government, having the pay stubs to back up that he used the money correctly, hence having the loan forgiven, but then requiring the sales-force to pay it back when the quarterly sales figures are reconciled. My sales have been decimated by the pandemic which will then leave me responsible for ‘paying back’ the entire amount of money I was paid. Has there been any further clarification on this point? I am a bit desperate as the quarter ends in 5 days and it will leave me as bad off as if the PPP never happened.

        1. Stephen, I truly wish I could help but this is a labor law issue that’s not in my wheelhouse. I’d recommend you contact an employment attorney and/or your state Department of Labor.

    2. I have a similar situation and my company is handling the payments as draw against commission as well, at this point.
      Have you found out any further information regarding commissions sales and forgiveness?

  77. My company was approved for the PPP loan and we will be able to retroactively pay our laid off employees. Does this mean they will have to pay back any unemployment benefits they have received?

    1. Katie – I have not seen guidance on that. Where did you find information about retroactively paying employees? I haven’t seen that guidance and I would be curious where you found that.

  78. Thanks Gerri. I read through it. Not seeing anything that covers it. Maybe I can simplify. If a business pays an W2 employee but the business makes very little Net Profit (line 31 Sch C). Where does the W2 payroll come into play? The goal of the PPP is to protect payroll. I’ve looked everywhere for answers. Applications ask for 940s and 941s to be uploaded along with Sch C but they’re not factored into the application, as far as loan amount is concerned. Any deeper thoughts you have would be appreciated. I’m made it a generic question so, it wouldn’t be specific to my business.

  79. do you count wages paid towards 1099s in your expenses on your schedule c if you are a sole proprietor. it seems unfair to me that you cant count it as payroll but you have to count it as an expense.

      1. thanks gerri,
        the article did not help. what I was inquiring about was whether or not I should include or exclude funds I paid out to 1099s. on line 11 I paid out 42,561 in contract labor. long story short my net income for the year was (-) making me unable to qualify for the PPP. since I can’t count contact labor as employees I dont believe I should have to include the labor on my schedule c so that I may qualify, as i would like to keep my 1099s “employed” and can’t pay them and my office rent space both.

        1. 1099 contractors are not employees and the SBA guidance says you do not include them in your own PPP calculations. The SBA guidance says they are able to apply on their own. I know that helps them and not you, but that is the way the guidelines read. I’m sorry you didn’t find our information helpful. Here’s our more recent about how to apply for PPP by business type.

    1. Britt. Sounds like we are in similar situations. Please read my post, a few below yours (John A). I’ll post here any solutions I find, hope you can do the same.

  80. Hi. If we laid off our entire workforce, do we have to bring everyone back in order to qualify for the PPP loan forgiveness? Considering some need to stay at home and we have limited work, I wasn’t sure if only hiring back 25% or so would disqualify the loan forgiveness.

    Also, if someone makes $125K a year, is the first $100K (prorated) forgiven for payroll and the company must repay the other $25K?

    Thank you for answering all of these questions – you’ve been very helpful!

    1. Tiffany – Only the first $100,000 in salary may be used to qualify for PPP. You’ll use that amount to qualify there shouldn’t be an extra $25,000 to be paid back. Forgiveness is more tricky. Here’s our article on that- you’ll see there are a few questions we’re really hoping the SBA or Treasury will clarify soon. How to Apply For Forgiveness for Your Paycheck Protection Program Loan

      Thanks for the kind words and I’m glad we can help in some small way.

  81. Hello Gerri,

    This question pertains to a Licensed Real Estate agent (Independent Contractor?) that receives compensation via commissions from the RE Broker and 1099s. Would the PPP loan be forgiven if the funds are used for lost income during the Pandemic?

    Thank you!

  82. I was laid off, I am now collecting unemployment (including the extra $600/week), and my employer applied for the PPP loan AFTER they laid me off. I am actually making a lot more money on unemployment, so if they get the loan and want to bring me back, am I required to take my job back? Thanks!

  83. I an LLC and have a net profit on line 31 of Schedule C of $1797. I have 1 W2 Employee (myself) and I pay myself a wage $2083.33 a month totaling of $25,000 a year. The PPP calculations only factor in my net profits, which shows me receiving PPP of $374.37. Is my payroll not a factor in the calculation of what I should receive?? My payroll is W2 and Federal Taxes, SS and Medicare are all withheld.

      1. Thanks Gerri. I read through it. Not seeing anything that covers it. Maybe I can simplify. If a business pays an W2 employee but the business makes very little Net Profit (line 31 Sch C). Where does the W2 payroll come into play? The goal of the PPP is to protect payroll. I’ve looked everywhere for answers. Applications ask for 940s and 941s to be uploaded along with Sch C but they’re not factored into the application, as far as loan amount is concerned. Any deeper thoughts you have would be appreciated. I’m made it a generic question so, it wouldn’t be specific to my business.

  84. If a restaurant uses the PPP loan for eight weeks of payroll and when the eight weeks are over if business levels are so low that the employees need to be laid off again does that take away from the forgiveness?

  85. I have paid my employees for 2 pay cycles, because I heard I was supposed to keep them on the payroll. I applied for ppp loan . Bank has told me I am approved but I havent received any funds yet. My employees should get paid again tomorrow. I’m confused as what i”m supposed to do as my funds are depleting to pay my employees and I wont have money to pay for my expences.

  86. Can i pay our workers compensation insurance using the ppp funds? I didn’t have employees or payroll i wouldn’t have to pay workers compensation insurance so i feel that this is a payroll expense.

  87. I am an employee that has been receiving my salary since April 1. My company has applied for PPP funds my question is if I resign on April 31 will there be any repercussions to me four instance will I have to pay anything back. And if my employer gives me a hard time upon resignation do I have a recourse thank you

  88. Hi there , thank you for answering questions.
    I am self.employed with an s Corp. I have 2 employees . I have been waiting for a ppp loan to get approved and it still hasn’t. Am I able to collect unemployment until my loan is granted? I have read that we are unable to file for both unemployment and a ppp loan. My fear is that I won’t see any money from ppp and lose out on potential unemployment benefits. I pay myself annually 96k. We have been shut down since March 19 and I’m unable to collect any money from my business or government.

    1. Chad,

      I haven’t seen specific guidance on that yet but I will be sure to update the story when I learn more. I’ve seen some CPAs suggesting business owners may collect unemployment until their PPP funds come through but I can’t advise either way.

  89. I am assistant practice manager for a medical office. We obtained our PPP loan on 4/21. We have payroll that is due 4/28 which inclueds hours from befor 4/21(loan date) can these funds be used to pay the time before 4/21?

  90. My employer reduced my hours and applied for the PPP and was approved. I started the unemployment process but now that they were approved they asked me not to continue (I have not received any unemployment compensation). My question is they have told me they can back pay me for the additional hours I would have been working but it would be taken from my vacation hours. Shouldn’t they be paying me since they were approved and not use my vacation time.

  91. Besides regular payroll , I use independent contractors. One of them , because I keep him so busy has not worked for anyone else.Can I use what I pay him as part of my loan application. Or does he have to apply on his own

  92. I just read an article in the Fort Lauderdale Sun Sentinel that said if you are using a payroll company your loan will be declined. They mention that if your tax forms show zero dollars for payroll the SBA will not approve the loan. Is there any truth to this ?

    1. Ron – The SBA guidance says you can use a PEO and apply for PPP. I also don’t know what the second sentence refers to. Maybe they are talking about if you file Schedule C and had a loss for 2019? Sorry I don’t know enough about what was written to comment.

  93. Hello, thank you for this eye opening article.
    My question is: if you are granted a PPP loan can you stay closed and just pay your employees a reduced hourly wage or do you have to reopen your business and operate!?

  94. If I have 5 employees that are all part time and want to bring back 1 employee full time and 1 part time that equal the payroll for the 8 week calculation, will I be able to get this loan and will it be forgiven. My 5 employees had different total hours each payroll, not permanent regular hours but are permanent employees

  95. I have applied for both EIDL and PPP Cares Act programs for my business. We have application numbers confirming filing, have received the EIDL advance and notification that our PPP has been approved and in process of funding. We haven’t heard anything directly regarding our EIDL loan amount, but did receive a notice saying the application was approved two weeks ago.
    It seems odd that we received the advance, but still haven’t been notified of EIDL approved loan amount. How much time have most business’s found it takes for notification EIDL loan amount and funding from the date of approval notification?

  96. I’m currently on unemployment my employer got approved for the ppp loan. He stated when the funds come in I can no longer collect unemployment (which I understand) and told me that I will be working 20 hours a week instead of 40 hours a week. I’m a server. I will not be making enough to get by. Will I still be eligible for unemployment?

    1. In some states, workers can be eligible for partial unemployment due to reduced hours but we’re not an expert in unemployment law so we recommend you try to get advice from your state unemployment agency. (I realize how hard that is to do these days and apologize in advance!)

  97. I enjoyed your article but am still confused about my situation.

    I own multiple companies that qualify for PPP

    I am the owner manager of each company, and I received compensation over $100,000 from each company.

    I know the $100,000 limit per employee applies to each individual company, no question but, can I apply thru multiple companies and use my $100,000 limit in each company, or does the $100,000 limit apply to me as an individual, therefore allowing me to apply only once?

    Thank you,

    I am anxious to hear your answer as I am unable to get clear guidance thru my internet research.

      1. Yes I did read it, and I read it again, and I am a little more confused.

        I spent an hour googling and I have not gotten a definitive yes/no answer yet. It seems the income limits apply on a per company basis so I should be able to apply with multiple companies.

        I will keep looking, and if you stumble across it, let me know.

        Thanks again and have a Happy PPP day!

          1. Hey Mitch (or Gerri) did you end up finding anything else? Really curious about how the $100k limit applies, especially if someone is employed at multiple companies. It seems like the limit is per company, but I haven’t found any explicit guidance one way or another.

          2. I haven’t. My guess is it would be prohibited for an individual to be paid more than $100,000 through two different companies and have both forgiven. I imagine they’d consider that a windfall which they generally try to avoid (at least at the individual level!)

  98. I hired my first employee March 1st, but she had been working for me since early 2019 as an independent contractor.

    If I were to calculate my average monthly payroll costs over the past 12 months without the 1099 payments in 2019 then it would be inaccurately low since we’ve only run payroll for March and April. I know typically 1099 payments cannot be counted for the PPP loan, but I feel I’m in a unique situation since this individual now IS an employee.

    Any thoughts would be appreciated, thanks in advance!

    1. Barbara – It seems this is one of those situations the PPP doesn’t really accommodate, at least from what I’ve researched. But I can’t provide legal or tax advice so you may want to reach out to an attorney or tax professional. My best advice is for you to reach out to your elected officials in Washington for help. This is a federal program and they have staff who are supposed to help with those kinds of questions.

    2. My employer got approved for the PPP this week but when it came to pay day on FriI was still paid the Reduced hours I worked this week. And is saying I can’t file for unemployment for this week because they got the PPP. Do I still file for unemployment for this week since I was paid for reduced hours?

    1. Our articles are written for small business owners trying to navigate these COVID relief programs, rather than for employees. So as an employee you’ll need to contact your state unemployment office (not easy these days – I’m sorry!) Or you can ask your elected officials in Washington for help if you can’t get an answer elsewhere.

      If you were self-employed and trying to understand how to apply for unemployment vs PPP, our answer would be “we’re not sure.” The SBA supplement to the Interim Final Rule says: “In addition, you should be aware that participation in the PPP may affect your eligibility for state administered unemployment compensation or unemployment assistance programs,
      including the programs authorized by Title II, Subtitle A of the CARES Act, or CARES Act Employee Retention Credits.” But that’s the extent of what we’ve seen.

  99. My husbands company is providing payment under the PPP program as they received a loan. They are saying the if he works 20 hours but gets paid for 40 he will have to payback those hours later when business picks up….ex: he would work 50 hours and only get paid for 40 so 10 hours be credited back to this time of PPP paid. Is this correct and can businesses do this?

    1. Marcy – That’s not how we understand it to work. Under PPP, employees can be paid for not going to work. Your husband’s question is a labor law question, however, so I recommend he contact his state Department of Labor.

  100. I have received the ppp loan. As a school-age childcare provider, the business was shut down. I applied for the loan and advised my staff to sign up for unemployment while the loan process moved slowly forward. Now, I have the loan and many of my employees are receiving a $600.00 increment which allows them to collect more than if I pay them as usual. The school year has ended and I will not be hiring back until September. I’m confused about my responsibility at this point.

  101. As restaurant employees, does the staff physically have to go into our place of work and clock in hours in order to get paid? California shelter is still in place and some are not comfortable going into work and risking our families lives. If not, does the employer have to replace a staff member in order to compile with the loan terms?

      1. My boss filed for the ppp loan and I cannot file unemployment this week will I still get my retroactive back pay for the $600 extra on unemployment

        1. Cheryl, it’s my understanding that if you were eligible for Pandemic Unemployment Compensation (PUC) for the time before you were called back to work it can be paid retroactively. But I’m not an unemployment expert and you’ll need to check with your state unemployment agency to find out for sure what benefits you are eligible.

          1. I’m only asking if unemployment will give me my back pay for the $600 extra for when I was filing unemployment

  102. The company I work for is behind on state taxes. We are on a payment plan with the state. Unfortunately this has kept me from renewing the Incorporation status. The bank said unless we get the incorporation status fixed, we will not qualify for the loan. I can’t find this listed anywhere in the disqualifications.
    Please advise,

  103. HI,

    Filling out loans at this moment and have one Question re clarification of Sole-proprietor vs Self-employed:
    (I have already searched the Self-Employed: How To Apply For A Payroll Protection Program PPP Loan page and looked everywhere)

    Normally I’m considered either/both, but since we have to pick ONE for the PPP, which should it be – what are the differentiating it based on?
    Banks and CPA offering conflicting answers.

    I file Schedule-C, but do have a “Schedule-SE” on my 1040.
    Only 1099 I received this year was from a sublet-er, but I do get them for work I do on occasion, (in prior years).


    1. Accordin to the IRS, you file Schedule SE (Form 1040) to figure the tax due on net earnings from self-employment. The guidance from the SBA is to use Schedule C, line 31 net profit from your business to qualify for PPP.

  104. After not getting a PPP loan in 1st round due to excessive applicants, our small company also applied to a 2nd lending institution. If we are lucky and get a loan, will our acceptance automatically cancel our other loan application? Thanks for any advice.

    1. June – You may want to let the first lender know lender 2 submits your loan to the SBA and gets approval. Otherwise they will be spending time trying to process your application.

  105. Regarding my previous concern or question I want to add:
    Can I have future benefit like claiming those months with lost without not sales/revenue because forced to be closed as my business is a nonessential business, it is a massage spa. can I claim those lost on future profitable business under optimist scenery?
    I have 22 w2 employees.
    I would like to know what would be the economic benefits for my business rehiring and paying employees just to stay home?

  106. I started a new business in January with owners working for no pay. We hired our first employee the end of January and they started work on February 17. Are we excluded since our first payroll was too late? Or is it good enough that we were in business on February 15? Thanks!

    1. Scott the CARES Act states: “(II) CONSIDERATIONS.—In evaluating the eligibility of a borrower for a covered loan with the terms described in this paragraph, a lender shall consider whether the borrower—

      “(aa) was in operation on February 15, 2020; and

      “(bb)(AA) had employees for whom the borrower paid salaries and payroll taxes; or

      “(BB) paid independent contractors, as reported on a Form 1099–MISC.

  107. Is it legal for the employer that has gotten the loan to make their employees do things non-job related? Example putting in sprinker system in his own personal home?

  108. If I have 10 employees and I do the payroll protection. Do I have to bring the same 10 back . Can leave some on unemployment and hire different people as long as I still have 10 employees will it still be forgiven.

  109. I am a sole proprietor. I applied for PPP on 4/09 and was approved and got the money on 4/16. I did not know at that time I could apply for my wages. If I apply for a second loan for my own wages will it be denied?

  110. Thanks for this article. I am a bartender who was laid off March 15th due to the pandemic. My employer qualified for a PPP loan and will be making offers to rehire this week. The pay is the same hourly as before but obviously without tips – which was the bulk of my earnings. This means the offer is for significantly less money – basically minimum wage. Additionally, I live with people who have compromised immune systems and don’t want to be public facing and risk getting sick or getting others sick. If I turn down this offer for re-hire, will I still qualify for unemployment benefits?

    1. We haven’t seen any further guidance beyond the email forwarded to us from the SBA that says it is not. I’d recommend reaching out to your Senators in Washington. This is a federal program and that guidance is needed.

      1. Thank you for the reply. So multi-member LLCs taxed as partnerships can apply for PPP, but they cannot use K1 to substantiate payroll. Does that mean only LLCs must have W-2 employees to qualify?

        1. Mark – I’m not 100% sure. Other than the email I shared, this is the only guidance I’ve seen from the SBA Administrator specifically for LLCs: “However, if you are a partner in a partnership, you may not submit a separate PPP loan application for yourself as a self-employed individual. Instead, the self-employment income of general active partners may be reported as a payroll cost, up to $100,000 annualized, on a PPP loan application filed by or on behalf of the partnership Partnerships are eligible for PPP loans under the Act…that limiting a partnership and its partners (and an LLC filing taxes as a partnership).” I’ve looked and can’t find any more guidance for this situation. I’d recommend you reach out to your Senators in Washington and tell them you need help getting specific guidance from the SBA.

  111. I have a 2nd side job that is a 1099. I am still fully employed for my first job. would I even be eligible for this?

  112. One important detail that is not in this article and that I can’t find anywhere is how many hours per week is considered FTE for the purpose of the PPP loan/grant. Do you happen to know?

  113. I am a 50 hour per week employee. My pay is based on a 10 hour per week guaranteed OT. Under this program is my employer obligated to pay my entire pay or only the 40 hour pay?

      1. If we are cut our hours from full-time to part-time due to slowness or if we have to be home for a current amount of time because of sickness. Is our employer still suppose to pay use our normal pay or can he cut is out until we come back full-time again?

  114. My employer just received a PPP loan in the amount of $80,000 last week (week of April 12 – 18). This afternoon, my employer told me that I was being laid off, and that today was my last day of employment. He informed me that my position was being eliminated (I am a litigation paralegal) and that he was hiring an additional attorney in lieu of having a paralegal, in an effort to generate more money for the law firm. My question is: is an employer still eligible for PPP loan forgiveness if he lays off an existing employee (I have been a full-time employee since 2015), but immediately hires a new employee in order to retain the status quo with regard to payroll? I have not been able to find anything online that addresses this issue, so if you are able to provide an answer I would be very appreciative. Thank you.

    1. I’m sorry you were laid off at such a difficult time. PPP forgiveness is based on headcount and salaries. Nothing we’ve seen in the guidance requires them to maintain the same employees.

      1. I have the same problem, my employer doesn’t want to rehire old employees, he is hiring friends and family members using them for payroll, but he will take the money for himself.
        Can some one change the law about keeping past employees. I have knowledge that a lot of owners seeding the same taking the ppp loan payroll benefits through friends and family members.

    2. My employer just received the PPP loan . Now she is saying she will no longer be paying into our IRA or paying for our health insurance. Can she do this even though she did this all before the loan?

  115. I own a corporation as a musician/performer, and I pay my band mates as “non-employee compensation.” I have seen conflicting information about whether or not I can use the PPP loan for these purposes. I applied and gave all the necessary information, including 1099 payments from 2019, and was approved for the loan. I got the loan today, but now I’m worried it won’t be forgiven if I use it for my band since they are considered Contract Labor. What are your thoughts?

    Thank you!

    1. The SBA has said not to include independent contractors in the business owner’s employee payroll calculations. They are supposed to apply on their own. I’d discuss this with your lender or tax professional. It’s in the
      SBA Interim Final Rule:

      h. Do independent contractors count as employees for purposes of PPP loan calculations?
      No, independent contractors have the ability to apply for a PPP loan on their own so they do not count for purposes of a borrower’s PPP loan calculation.

  116. Hi Gerri -thank you so much for this great article and for answering so my questions. It is very helpful. I own a “C corp” with about 70 employees of which some are full-time and some are part-time. I have managed to keep about half on payroll and I just received my PPP loan so I can pay the others now. Unfortunately, we are in CA and have a stay at home order. A handful of employees can work at home but others will be paid not to work. I am totally fine with this and it is why I applied for the loan. I have 2 questions:
    1) Can I give a small increase in hourly wage for an employee who is taking on more responsibility?
    2) For computing FTE, we use 30 hours per week for our health insurance. Am I required to use this number or can I compute FTE at 40 hours per week?
    Thanks Gerri,

    1. John, I assume your question about increasing wages is whether that new wage would impact forgiveness. We’ve since written a piece about forgiveness: How to Apply For Forgiveness for Your Paycheck Protection Program Loan I haven’t found any specific guidance regarding your question about calculating FTE. There are still many questions about forgiveness. Senator Rubio who chairs the Senate Committee on Small Business and Entrepreneurship to Treasury and the SBA Administrator asking for guidance on the forgiveness provisions. You can ask your tax or legal professional. You may also want to contact your elected officials in Washington as this is a federal program.

  117. I’m an independent contractor ( realtor).
    i was depositing my pay checks into my account at a bank but they tell me that my account was not a business account so i cannot apply for PPP.
    Is that correct?
    i have my 1099 for last year.

  118. Are employers who get this loan allowed to use it as free labor to have employees do work that they might not be qualified to do? For example, if there isn’t enough work in your job description, they transport you to an off site location to install a personal property cow fence? Or weed eat their property?

  119. I’m confused on how PPP loan forgiveness will be affected by employees furloughed prior to 4/26/2020 and refuse to return to work because they found another job, want to keep collecting unemployment benefits, or just don’t want to work. Assuming we meet the FTE level existing prior to 2/15/20 and payroll payouts equal at least 75% until 6/30/2020 how will these employees not returning affect the loan forgiveness of my PPP loan. I’ve read that individual employed before 2/15/20 wages and salary’s must equal no less than 75% during the 8 weeks following funding of the PPP loan.

  120. Do you qualify for PPP if you are a statutory employee that is on 100% commission, required to pay all your own expenses and file a schedule C?


  121. We have several employees that feel like they are receiving more money collecting Unemployment Insurance funds with the extra $600.00 per week they are getting rather than receiving their paychecks again. We received our PPP funds yesterday. We are wondering if other employers are hearing this too.

  122. Hi Gerry- thank you for your well written article.

    1- I’ve secured a ppl Loan- can I increase salaries (including my own- as long as it stays under 100K- I’ve always been a w-2 employ of our s-Corp)? How about increasing hourly wages?

    2- any word if you will have to show a revenue decrease in order to have the ppl forgiven? Everything I read neglects to address that- the difficulties for my business will likely happen later in the year- so I’d like to use ppl to cover my payroll and build a savings to ensure we survive the long term. Thanks!

    1. I don’t know the answer to question #1 unfortunately.

      For the second, I can’t answer it for you but I will point you to the CARES Act which requires the borrower to certify that “(I) that the uncertainty of current economic conditions makes necessary the loan request to support the ongoing operations of the eligible recipient;” It also states: “It is the sense of Congress that— (1) all borrowers are adversely affected by COVID–19; (2) relief payments by the Administration are appropriate for all borrowers”

      At the same time, some attorneys are warning that borrowers should be careful about applying if their business has not been impacted. This article explains why: You Got Your Paycheck Protection Program Loan. Now What? Advice From Small-Business Lawyers

  123. Great article, I hope you can answer this question:
    It looks like I am approved and should be getting funded soon, however my type of business (youth sports) is going to take a while to take off again. I do not believe I’ll be even “open” in 6 weeks time…I think I understand the minutia about the payroll, etc, but my question is: what happens if I chose to pay other outstanding bills (landscape services for the sport fields, repairs for the building etc) or issue refunds for the programs that were suspended? Am I not allowed to do any of that? or simply won’t be forgiven?

    1. Pedro: PPP funds are to be used for very specific purposes as described in the article, and primarily for payroll. If you want to use them for other purposes we recommend you get legal advice. The Economic Injury Disaster Loan (EIDL) may be a better fit for working capital needs.

  124. I noticed one of the acceptable expenses in utilities was “transportation”. Does this include fuel, insurance, registration fees and monthly loan payments on vehicles used for business purposes as long as it’s not more than 25%? Also, not to keep beating a dead horse but I too am a single owner LLC that takes draws as I need them for personal expenses. Do I just continue the practice of cash withdraws or do I need to actually write myself a check? Would that be acceptable proof? Thank you for this article! It by far has been the clearest and most concise one I’ve seen during my research.

  125. We had a forced closure, so laid off everyone, and most are now receiving unemployment insurance payments plus the federal supplement of $600. One of our employees was on leave at the time and can’t return because of family need and, now, travel restrictions. Must we re-hire her when we receive our loan (which is about to happen)? Our payroll calculations for the loan included her payroll information. Are we allowed NOT to count an employee? We want her back, but we don’t know when she can return and we don’t want to cut her off from unemployment insurance either. Re-hire and then, if necessary, lay off again? Another employee, a part-timer, prefers to retain her unemployment insurance payment until we re-open. Can we also allow that without risking loan forgiveness?

  126. Hello-
    We are an S Corp and in the last year it was just myself and my husband on the payroll. As our income is sporadic we pay ourselves quarterly whatever we can and take shareholder draws as we need them to cover expenses. Should we include shareholder distributions as part of the annual income? The wording includes similar compensation. It is included on tax returns as income and the appropriate taxes are paid so isn’t that part of our annual income?

    1. An email forwarded to us from the SBA dated April 6, 2020 states the following: “Only payroll costs in the form of salary, wages, tips, etc. are eligible for the PPP program. Owner draws, distributions, amounts recorded on a K-1 are not eligible for the PPP program.” This has not been discussed in official SBA guidance yet, however.

  127. Our business utilizes an independent contractor who has applied for his own PPP loan (to hopefully be received in the next week). We are planning to hire him into our business, and we are also expecting the PPP loan to come through any day. Do we need to wait until both loans have been “used” (8 weeks beyond the origination of the loans), or could we hire the independent contractor sooner than that date?

    1. It seems to me the decision to hire the independent contractor is a separate decision but perhaps I don’t understand your question. At any rate, we can’t offer specific advice and recommend you consult a legal or tax professional.

      1. I believe the question is what happens if the independent contractor gets PPP and is then hired by the company as a W-2 employee and hence they use their PPP money to pay the now employee?

  128. HI Gerri, my situation is as follows: I am the owner and sole employee of an S-Corp/LLC, and pay myself a regular W2 salary as an employee. My business is editing – I have three corporate clients for which I provide editing services for newsletters and trade publications. As of right now, none of those clients have reduced workflow to me, but anecdotally I understand that it may be in the works. Can I apply for the PPP even though my employment and work hours have not yet been reduced? The idea would be that it is there if and when I need it. If I end up not needing it – if my hours and workflow are not cut – what would my course of action be? I.e. would I get in trouble somehow for taking it out when I did not end up needing it?

  129. Hi –

    I applied for PPP loan for my (3) W2 employees and it appears that the loan was accepted. As an LLC, I do not get a salary from the business and as such I am not counted as an employee.

    Can I apply a second time for PPP as an independent contractor? Even though I already applied for my three employees?


    1. I don’t think so John because the CARES Act states a business can only get one PPP loan and you work for your business which obtained a loan. But I can’t say definitively so you may want to talk with your advisors or Small Business Development Center.

  130. My employer, a physician in a private practice, has applied for the PPP. Most of the staff’s workdays have been reduced from 4 days/week to one day/week. We have been informed that we must use up all of our PTO hours during this 8 week period. He will pay that PTO with the PPP funds. Is that correct use of this program? Or should we be paid directly for the missed days of work with the PPP funds, thereby allowing us to preserve our PTO time for the hopeful months ahead?  

  131. My wife and I file as a Qualified Joint Venture we get one 1099 MISC under my wife’s name only and because we are a Married Couple Unincorporated Business (qualified joint ventures) are return has 2 separate schedule Cs , how do we go about applying to the Paychek Protection Loan? 2 separate PPP applications ?
    This is one of the best articles if not the best about the PPP

  132. Hello Gerri,

    Is the 8-week period for the requirement of payment of payroll based upon payrolls paid, or payroll costs incurred?

    For example, pay dates are on the 15th and end of month. Paycheck Protection funds on the 27th of the month (April), so pay dates April 30th, May 15th, May 31st, fall in the 8-week period. Payroll protection covers 8-weeks from date of funding so it covers April 26th to June 28th.

    Should a pay check be written on the 28th of June, before the regularly scheduled pay date to ensure all funds are used in the 8-week period?


      1. I read guidance on this elsewhere that suggests you should accelerate the date of your payrolls in order to get more into the 8 week period.

    1. The CARES Act states that the covered period for PPP loans closes on June 30, 2019. I saw you left another comment on 10 days and that’s a requirement for lenders, not for you as an applicant.

      1. Hello
        I own a small buisness in New Mexico. I’m 50 50 partners with my father in law and we work the buisness ourselves with one other employee. We opened our Buisness on February 1st 2020. When we opened we did not set up a payroll out the gate. What we did was pay ourselves back our initial investment into the business and then started payroll in March.

        Does this disqualify us for the PPP?

  133. I am a sole member LLC working as a contract paralegal. Checks are written to my LLC and I in turn pay myself. The LLC was formed mid-2019. My first question is what loan, if any, may I apply for? Second, how do I prove income? From the checks coming in to the LLC or the checks to me out of the LLC? Lastly, I haven’t prepared my taxes for 2019. How does this work? Thank you for your help.

  134. My company has been around for 10 years and averages around 150k a month in payroll and I have been hit pretty hard by the pandemic. I am a sole proprietor / LLC and my credit is terrible. Will this disqualify me for the PPP loan?

  135. My husband and I run an LLC and both own 50% of the company. We do not have employees or formal payroll. We don’t receive actual payroll checks but instead just pay ourselves what is left after the bills are paid for the month. Do we qualify for a PPP loan?

  136. I am trying to apply for Cares PPP loan on behalf of a Social Club/ Cultural Organization. We are incorporated in State of Ca as a 501C.
    There are about 150 members that are proprietary members. We own and operate a Banquet Hall and also restaurant that is open to the public.
    I started the application process through Bank of America’s website, that is our financial institution.
    I was well into the application process. There was a question that asked how much percent of ownership does the applicant own.
    I listed our Manager as the applicant because she is the responsible person and also a signer on the bank account.
    No one including any of the members owns 10 percent of the entity.
    The application form put up a red check mark and stated that the listed applicant has to own must own at least 10 percent of the entity.
    Is there a provision for a responsible party to apply who does not own 10 per centRobert

  137. I’m a single owner LLC. If I get the loan from the PPP, how will I pay myself? Will I write a check for the whole amount or specific amounts each month and pay myself from my business checking account with a business check and then create an income and expenses (profit loss statement) to provide as proof for payroll to have the loan forgiven through the PPP? The loan is for 2.5x my monthly salary. Would I pay myself 1 month + 1 month + 1/2 month, or 1/2 month + 1 month + 1 month, or all 2.5 months? I don’t have any payroll system or processing setup. I pay myself with business checks. Thank you!

  138. My boss told us that her would pay us our 40 hrs for the week, but since we have limited hours we can work due to the loss of clients he told us we would have to volunteer our time to get our money. I made sure they were using this paycheck protection program but I can not find were it says employees have to volunteer their time to get paid

    1. I have not seen anything in the guidance to that effect. Yours seems like a labor law question. I’d recommend you contact your state or the federal Department of Labor.

  139. I have a question I have not seen addressed. If a business gets a ppp loan, he pays his employees and rent etc, is there a program for the owner to receive income. The ppp would seem to pay everyone except the owner.

    1. I haven’t seen anything that would exclude owner’s pay from the PPP. In fact, the guidance for the self employed specifically includes how to calculate owner’s pay. I’d suggest you contact your tax professional for specific advice.

  140. Hi Gerri – thank you for the article. Today is 4/9 and still haven’t seen anything that speaks to my circumstance.

    I am a single-person S-corp (flow through). Business has gone down to $0 since March 13. Because my operations go up and down 4x a year I take a generally lower salary (W2 wages) (to ensure I have enough to cover payroll taxes at the time) of about $36K and have distributions that are not on a regular schedule but simply taken out as needed as additional compensation throughout the year totaling maybe $60K. For the PPP calculations I’d expect “salaries” to be “compensation” in my world? That is, essentially looking at my 1040 for what I “make” and not 941s? What are your thoughts?
    Thanks – John

    1. John, We haven’t seen the SBA address this in published guidance but an email dated April 6, 2020 from the SBA was forwarded to us says: “Only payroll costs in the form of salary, wages, tips, etc. are eligible for the PPP program. Owner draws, distributions, amounts recorded on a K-1 are not eligible for the PPP program.” Since this is not published guidance (in the Interim final rule) we recommend you get legal advice or call your Senator or Representative in Washington for help.

  141. Please explain a couple of things regarding any tax credits with 1099. My understanding is a 1099 or sole proprietor qualifies making commissions only. Like many small businesses this is the time of year you file and pay taxes. So by delaying the taxes until July, how does
    the Care’s Act address paying taxes? It seems like to can qualify for the loan, have it forgiven. But then many small business may still owe taxes. It would be wonderful and helpful to have a tax holiday all together. Including for small businesses, 1099, and sole proprietor.
    Can any of expenses be carried as a loss? Thank you

    1. Marie, this article is just about PPP. There are tax provisions in the CARES Act that are separate from these loans. I am not a tax professional so please consult one for advice specific to your situation.

  142. Second item under the certifications on Page 2 of the form states that loan request is NECESSARY to support ongoing operations of the applicant. This is on loan application. If a company is financially secure and does not have to receive loan to keep operating does this exclude them? Problem is we do not know how long situation may last and may need the money later on when not available. Please respond. Thanks

  143. I own 2 businesses as of February 15 th , 2020. Can I apply for emergency stimulus for each business.? How about PPP?

  144. Hey there,

    I’m an individual contractor as a personal trainer. I can’t visit clients during this time due to the virus and wanted to know if I could count what my normal monthly income was before this event towards this loan? I don’t have other employees so I essentially would be asking 100% for a loan covering my normal income. Would this count as payroll expense?


  145. I have a LLC with my husband and no employees, how do we apply for the PPP. I have read so much information but everything is for employees or self employed but wants 1099. We file using 1065 and issue each of us a schedule K. I am unsure if we file as business using 1065 or personally using schedule K and unable to really get answers to this. Can you help?

  146. I have a few questions.

    1. Do the two owners of an S-Corp count as an employee in the “Number of Employees” ?
    2. Do these owners salaries also count in the Payroll computation?
    3. Do employer paid retirement contributions to owners retirement funds count?
    4. For employees that make over $100k, they count but just get capped at $100k for their Payroll computation?
    5. We also own a second S-Corp that has one employee. Since it appears that we can’t file for the loan from two different companies, can we include the employee from the other company in the Payroll computation of the applying company?

  147. I opened my business up on February 24th. I run a restaurant with very little employees but i am afraid i have to let employees go or i wont be able to pay my rent. My question is, I am trying to get this application from citizens bank but i recently seen online that your business had to be opened before February 15th and you have to show documentation. Is that just to be reimbursed or am i out of luck and wont get approved for this because i opened about a week after the 15th.

  148. I am an S-Corp with no employees. I have not filed 2019 taxes because the due date to file is now 7/15/20 and I will owe. I have received one 1099-MISC for 2019 but my other clients do not provide 1099’s to S corporations. Will bank statements and the associated cancelled checks showing the company name which paid them suffice for proof of income? The loan form does not ask for expenses but will I need to submit those as well? Alternatively, I can go ahead and file my return but defer the amount I owe. Suggestions?

  149. i work for a store that had a kitchen fire and it was in the middle of repairs to the kitchen when we were told we had to close. Since it would have opened within weeks. Since the virus caused it to close and not continue the repairs so it could reopen when the ban is lifted.
    He continued to pay the employees until his money and credit card money were gone. He will also pay them with the ppp until he can bring us back to work. I need to know because if he cannot qualify will have to look for a job.

  150. Thanks for the article. I did a lot of searching and this is the best one I found with information on how the PPP loan works with individuals. I would like to be sure I understand or situation- my wife and I are 85/15 partners in an LLC. As many others, we pay business obligations and just sweep what is left for our personal income, no actual “payroll”. Would I be correct in saying that for the PPP loan we could use our 2019 K1’s as our ‘payroll’?

  151. There is one part of the PPP loan that I need clarified. I am co-owner of a specialty prop house. My husband and I are the owners. This is an S corp. We have 6 employees. When we were shut down as a non-essential business in Los Angeles, we had to lay off our 6 employees. We will hire them back when the shut down is over and they are allowed to come back to work. We plan on applying to the PPP loan and once we get the money, we will use 25% of it to pay rent. Then we will hold the rest until we can hire our guys back. At that point we will use the loan money to pay the payroll. So, I am concerned about the “8 weeks” and the forgiveness. What if we get the loan money, but are still shut down for 6 more weeks? In that scenario, by the time we pay our first payroll after the shut down, the 8 weeks forgiveness period would be over.

  152. How can new businesses apply. I just took ownership of an established business effective Feb 3, 2020. I have payroll documents but no tax documents yet. Any advice

    1. As it states in the article: If you were not in business for the time period beginning on February 15, 2019 and ending on June 30, 2019, then you can use your average total monthly payroll costs incurred from January 1, 2020 to February 29, 2020 and multiply that by 2.5.

  153. I am in sales and have an LLC where I am the only employee. I get paid my commissions via a 1099. I am applying for a loan where I will borrow 2.5 times my average monthly commissions/income from last year. Will I qualify for the loan forgiveness, and if so how it will be calculated? My assumption is that I will be able to forgive the difference between my average monthly income last year and what I will get for eight weeks after my loan funds.

    1. David, We have not seen official guidance from the SBA Administrator on this issue. An email from the SBA dated April 6, 2020 stated: “Only payroll costs in the form of salary, wages, tips, etc. are eligible for the PPP program. Owner draws, distributions, amounts recorded on a K-1 are not eligible for the PPP program.” Again that came from the SBA not the Administrator, so you may want to reach out to your elected officials in Washington for help.

  154. Which program should I apply for (EIDL or PPP) if I am a registered LLC, but file taxes as a Sole Proprietor using Schedule C. I am a single-member LLC with no employees. I don’t take draws throughout the year. Am I eligible for lost income for myself?
    I also work as an independent contractor and receive 1099s. I file this income on a separate Schedule C. How do I include this lost income in my applications? Am I allowed to have more than 1 applications for each of these ‘businesses?’

    Thank you!

  155. My husband has a small business with employees who travel in company vehicles to get to jobs. Is gas for the vehicles considered under “utilities” for the company?

  156. Is there a minimum number of hours that employees need to work under the Federal Payroll Protection Plan?

    1. PPP deals with payroll you pay your employees. We have not seen any guidance that specifies how or whether they are to perform certain work while they are being paid. We recommend you consult with your tax professional.

  157. My client is an Owner of a small business operating as a Sub-S ( so all profits get reported on his Income Taxes). His Payroll costs are for himself, and his wife. Does he still qualify?

  158. I have just laid off the employees two weeks ago and payroll is normally done this week for the previous two weeks. Do I start paying the employees right now instead of them filing for unemployment and pay them for being at home or use the loan when we go back to work to have capital to pay their paychecks?

  159. I have a couple of questions:

    1. I started my business in April of 2019. I haven’t paid myself any distribution of my net income, but I did rollover my 401ks and IRAs and started a company 401k. Does that count as a benefit expense that could be counted in the PPP monthly expense?

    2. It seems you’ve answered this but just to confirm the folks who I’ve paid are paid through 1099s – looks like that no longer qualifies?

    3. If the rules changed and I was able to count the 1099s and/or my retirement investment am I able to average the cost by 5 months or 12 months? I’ve read it both ways.

    Thank you for all your help – this has been a super informative article.

  160. I am a new business and will be using January and February of 2020 to calculate the total that I can borrow. I put the total payroll from those two months in the CARES Act SBA Loan Calculator, and it is exactly $10,000 more than the average of the two months divided by 2.5. What is the total amount that I can apply for and still have it forgiven? Should I do the actual average multiplied by 2.5 instead of the number that the calculator is giving me if I want the full amount of the loan forgiven?

    Also, as the owner, I did not take any pay for about the first 6 months that we were open. We were waiting to file 2019 taxes and then were going to take an larger owner’s draw for the first few months once we knew all other expenses were taken care of. We started taking smaller weekly owner’s draws on Feb. 23. How do I figure out how much to add to the total payroll cost for myself?

    Thank you for your help in advance!

  161. Hi thanks for the information on PPP. I would like to know if my business in loss from last 2 years and I don’t have any payroll to show because of this. Still I am paying for my store rent, utilities and other expense. Can I eligible to get PPP loan and also if yes, than it’s waive-able ?

  162. I co-own an LLC, the other member and myself take out monthly distributions so we are not W-2 employees. We take out a set monthly distribution instead of guaranteed payments. Can we include our distributions in payroll costs for borrowing and ourselves in the # of employees? There was no clarity at the time we completed our PPP application.

  163. Hello,

    Thanks for the article. I have been looking around the internet, gov’t sites, and SBA sites, to find information for owners of a multi-member (2) LLC. What’s not clear to me is since we take pay as draws, and this is my primary source of income, can we include our salaries as part of the payroll qualifier for the loan? I am hear different things, and its very confusing. Can you provide thoughts or insights?



  164. I was recently hired at an insulation company right before covid-19 am I eligible for the paycheck Protection Program I haven’t worked yet but I was hired what do I do I was hired two weeks before covid-19 prevented everybody from working.

    1. Parris, For PPP your business (even as a contractor) must be operational by February 15, 2020. If this program isn’t a good fit you may want to look into unemployment instead.

  165. My husband and I own a landscaping company. Due to our town cutting out half the things we can do I think we’re only gonna make about half the money therefore half the payroll. What do I apply for

  166. It lists utilities as something that the PPP money can be used for, but there is nowhere on the application to include utilities dollar amounts, so how/where do I include those dollar amounts? I get that I can list 2.5 times the monthly average payroll from 2019, but the only other thing included in the calculation is EIDL amount apparently. So where do I put in the utilities? Or do I have to apply for the EIDL separately in order to include utilities in that different loan, the EIDL? And is it too late to apply for the EIDL since you are talking about it above as if its past tense?

    1. Chris – Utilities are used for forgiveness calculations not to determine the loan amount for which you qualify. The loan amount is strictly based on payroll.

      EIDL is a completely different program than PPP.

      I know it gets confusing!

  167. I have 5 employees and two owners (S-corp). I receive a W-2 and a K-1, based on weekly salary and monthly draws. Do I count draws as part of payroll for this purpose?

  168. If an indépendant contractor receives a 1099 from an employer, they can file for a PPP loan as an independent contractor for their 1099 income, however, how would that individual qualify for forgiveness if they are only paying themselves? I.e. they are using the PPP loan to cover lost 1099 wages?

  169. When submitting payroll items – for calculating the amount of payroll for the 8 week period – how do I calculate the people who are paid over $100,000? In 8 weeks they do not make over $100,000 but will in a year. Do I use the maximum amount ($100,000) and divide by 12 for $8,333.33 x 2 months as their pay or am I allowed to use their entire pay?

    1. The maximum annual salary amount is $100,000 prorated for one year, but qualified benefits can be on top of that. See in the article where it says: Are Employee Benefits In The $100,000 Salary Cap?

  170. I’m seeking clarification on Questions 5 and 6 of the most recent version of the application (updated 4/2/20 per the Treasury’s website). Do these exclusions apply only to those convicted of felonies/crimes of “moral turpitude”, or are misdemeanor convictions/probation also included?

  171. I have only 2 1099 people and the others are all W2 employees. I realize I don’t count the 1099 people on my payroll figure. We did end both 1099 contracts when this Coronavirus started and we have received notice that they both filed for unemployment. Since I don’t count 1099 payroll do they count as someone that has to be brought back to get 100% relief from PPP loan? I wouldn’t think so since I didn’t count them in my loan request figures but need to be sure. Thank you.

  172. A sole proprietor in a business That is forced to close during the pandemic can’t earn net income, so would not be eligible for forgiveness of a PPP loan?

    1. The CARES Act doesn’t state anything about whether those employees must return to work while you are paying them and it’s our understanding the intention is to keep them on your payroll – not at your place of work. But we recommend you consult with your legal or tax advisor for specific guidance.

  173. Like an earlier person wrote, I have taken draws from my company on a sporadic basis – not under a W2, but under a 1099, which my business (“FCA”) already filed with the IRS. In other words, even though I own the company, I would be classified as a 1099 contractor. However, in order to satisfy the repayment provisions of the PPP, I was planning to pay myself as a W2 employee for the 8 weeks following receipt of the loan to avoid any question that it be classified as payroll. So my question is, can my business still apply for the PPP loan as I planned?

    Second question: I have another business (“TSI”) that also paid an outside contractor on a 1099 basis (1099 already filed with the IRS, as with FCA). FCA and TSI are affiliated by virtue of common ownership (me). Moving forward, I am planning to shut down TSI and wish to pay the outside contractor under FCA. Can I use the 1099 from TSI as proof of payment (I’m not even sure I have to show such proof of payment at this early stage of application), and then pay the outside contractor as a W2 employee for the 8 weeks following the loan to satisfy the repayment provisions of the PPP (much like I was planning to do for myself) – even though the payments would be made by the affiliated company (FCA), not TSI?

    Should I just get the application process going now and wait for further guidance, or should I just hold off on doing anything for the moment? Thank you for any help and guidance you can provide me.

    1. Hi Jay, realizing that some of these rules have changed over the course of the last few weeks, here are my comments based upon my understanding of having lived with the legislation.

      1. If you haven’t been paying yourself as an employee, collect any information you have available that would indicate that you have been paying yourself. That could include the tax forms you would file that reflected the 1099 income, they will likely need your P&L, income statements, and expense statements for the past 12 months to make your application.

      2. You cannot claim any independent contractors are part of your payroll. They are able to apply for PPP funds themselves.

      I hope that helps.

  174. I’m having a hard time understanding why payroll tax is excluded from the forgiveness amount…Federal payroll taxes are not minimal and due within 3-5 days after payroll is distributed and if a business has to pay those out of pocket how does this program make any sense? Where is the actual relief for the business?

  175. The Application for the “Paycheck Protection Program”, question #6 asks “Within the last 5 years, for any felony, has the Applicant (if an individual) or any owner of the Applicant 1) been convicted; 2) pleaded guilty; 3) pleaded nolo contendere; 4) been placed on pretrial diversion; or 5) been placed on any form of parole or probation (including probation before judgment)?
    My concern about this question is the part that says “any owner of the Applicant” The company i am filling the application out for has a silent 16% owner who pleaded guilty to a felony. Is the client still eligible to apply? How do i answer the question Y / N and what legal backing do I stand on if NO?

  176. As part of the application we must include all 20% shareholders; in our company we only have one such principal shareholder. Our bankers tell us that we need to include additional shareholders to demonstrate that we can account for 51% ownership in 5 or fewer entities, which we can. But given that each entity holds less than 20% and are not considered principals, do I really need to list them? I have not read this requirement anywhere, so hoping you can tell me this is not the case and we only need to list the single 20% shareholder on the supplemental application

  177. I am in Louisiana, if I get the PPP money now but still can not open my store and get my employees back to work till the stay at home order is lifted on April 30, when do I have till to use the PPP money? I saw it say the money has to be used within 8 weeks of receiving the money but we can not go back to work until April 30?

  178. If you receive the PPP loan and have 40 employees can you still have around 10 people work from home or do other duties for your business while getting the funds to pay their payroll ?

  179. I am a small LLC. My partner and I both have small distributions. I just received word from my banker that the distribution will not be covered under the CARES Act. Even though, as an LLC, we do not pay taxes on this distribution, we do pay taxes on our W2 income. Why could we not ask for the W2 income to be considered by the CARES Act.

  180. I’m a small business owner considered to be an essential employer for service automotive parts. However because a large portion of our business may not be deemed as essential. With this being said we laid off nearly 90% of our staff a couple weeks back. 1. Do we need to call our employers back to work now to qualify? 2. Or do we pay then to stay home until needed to get them off unemployment. If you answer to question 2 is to pay them but don’t need them to report, when should these payments begin.

  181. What compensation documentation does a small business S corporation need to provide to allow individual shareholders/stockholders to receive a benefit, if any, under the PPP?

    Has it been decided to use 2019 figures as a reference for payroll or the preceding 12 months?

    1. I’m not sure I follow your first question. Are they getting payroll? If not it’s not likely they qualify. See my response to other comments about distributions.

      The SBA and Treasury seem to be providing the choice of either preceding 12 months or 2019 except for self-employed Schedule C filers.

  182. If i apply for the loan and right now business is bad no work at all can i send my employees home and pay them with the money from the loan or do i have to keep them at work ? There would be no point to have them at work when there is no business plus where i live it’s on a stay at home order . I just need some clarity

  183. I am an independent contractor and have essentially been “let go” until after the crisis is over. I may do a small percentage of my previous work – am I still eligible to apply?

    In addition, are the funds from the ppp paid to independent contractors such as me, subject to the forgiveness feature of this program provided we return to work?

    PS – great article

  184. Do I get a paycheck protection loan if my business is still open but slower and may need to reduce employees,

    1. Brenda, The purposes of PPP is to keep employees on the payroll. You can apply but keep in mind your loan forgiveness will depend on employment levels. There is an opportunity to rehire employees to qualify for loan forgiveness. I realize this is confusing you may want to read the section above on How Do I Get Loan Forgiveness? –

      1. I am 1099 contractor and my boss who can’t claim me on her PPP loan as an employee wants her three employees to apply for the loan. She wants us to apply for the loan since she can’t pay us right now and keep working for her. We have some work but not a lot. Do we as independent contractors keep working for her if she can not pay us?

    2. I have a trucking business with only 3 drivers I issue them a 1099 at the end of the year. I pay them weekly as full time employees. . Do I qualify for the payroll protection?

      1. Although you qualify for a PPP loan, because you pay your drivers payroll is reflected in a 1099, you may not include them in your payroll calculation. You can count the payroll you pay yourself.

        1. What about if you are self employeed and still working for a Trucking company? Can you still apply for PPP loan?

  185. Are wages for part time employees covered in the payroll protection program – rules refer to full time employees’ salaries only. We have a business that employs 70 plus caregivers, many of whom work between 10 and 30 hours/week. We also have four full time staff and many caregivers that consistently work at least 40 hours.

    1. Pat – Do you pay them via 1099 or W2s? It is our understanding that you can include W2 employees in your payroll calculation but not 1099 contractors. The section above where we talk above about What is Payroll is based on the legislation and final interim rule. We are not able to provide legal or financial advice or specific situations and recommend you talk with your accountant or attorney.

  186. Hello,

    We have a winery and have 18 employees. Since we had to close our doors I only kept 2 of my salaried employees on and 2 part-timers to help with shipping orders and had to lay everyone else off. We did already apply for the ppp loan Friday, if we get it, Does this mean I have to bring all 18 employees back onto payroll? Since we are closed though I won’t have work for them, so would they be getting paid to not work, while The others I kept on are working? Or can I increase salaries for those actually working to meet the % of the loan that needs to go to payroll to be considered for forgiveness? For forgiveness to be considered how much of your actual headcount comes into play if we just simply don’t have the work to bring everyone back? I’ve called all employees also to let them know I might be able to bring them back and some want to stay home on unemployment because they say they will be making more (with that extra $600/week) so not too sure what to do there. Thanks so much for your help.

    1. Jenny – We wish we could advice. The only guidance we have to far on questions like yours is the actual legislation and the Final Interim rule from Treasury. Unfortunately we don’t have an answer to your question about employees who do not want to come back to work. Here’s what the PPP Factsheet from Treasury says. You may want to let your Senators/ Representative in Congress know the confusion you’re facing here as no doubt additional rules will be written. ” How much of my loan will be forgiven? You will owe money when your loan is due if you use the loan amount for anything other than payroll costs, mortgage interest, rent, and utilities payments over the 8 weeks after getting the loan. Due to likely high subscription, it is anticipated that not more than 25% of the forgiven amount may be for non-payroll costs. You will also owe money if you do not maintain your staff and payroll.
       Number of Staff: Your loan forgiveness will be reduced if you decrease your full-time employee headcount.
       Level of Payroll: Your loan forgiveness will also be reduced if you decrease salaries and wages by more than 25% for any employee that made less than $100,000 annualized in 2019.
       Re-Hiring: You have until June 30, 2020 to restore your full-time employment and salary levels for any changes made between February 15, 2020 and April 26, 2020.

      1. Do I have to have people actually working in order to restore the payroll to qualify for loan forgiveness ? I own a daycare and employ 19 people. A few weeks ago I told them to file unemployment which they have been collecting. Thank goodness they are getting paid unemployment as well as $600 additionally which ends up being more than their regular pay. Also am I going to negatively impact their ability to receive that extra $600 weekly unemployment by putting them back on the payroll? Should I wait until we are able to open again and do I have to wait until we are able to open again? Am I even able to put them back on the payroll before we are able to open again? Our state has a stay at home order until at least April 30 and I am guessing it will be even longer. Thanks so much for your time.

    2. we have the same problem…. The extra 600.00 per week on unemployment! our workers dont want to come back if they will loose that 600.00 plus unemployment. They will be making more not to be on payroll!

  187. I am self-employed and receive 1099 income sporadically and quite unevenly throughout the year. I don’t pay myself a set salary, but take regular draws from my net business income to support my family (like any regular employee does with their paychecks). Any idea how forgiveness approval would work for people like me? Bank statements will show my usual monthly draws, but there are no “payroll filings” (I pay self employment tax on my 1040, calculated on Sch SE once a year). “Proof” of the proper use of the loan seems tricky… thank you!!

    1. It is tricky Melinda and we don’t have guidance yet on your specific question yet from Treasury or the SBA. There is a new application that is supposed to come out on April 10th for contractors and self employed. Hopefully it will provide more guidance. In the meantime, you may want to let your Senators and Representatives in Washington know how you are finding the application confusing as more rules are likely to be written to clarify these kinds of questions.

    2. Do employees have to come back on payroll if we’re granted the PPP? Do they have a choice to stay on unemployment?

  188. Great article, thanks! I have 5 full-time people in a property mgmt company. 4 of the 5 are 1099. What are we supposed to do, lay them off so they can apply and then ask them to work? Why on earth would they exclude 1099 from payroll? There is no incentive for the 1099 to even work? We need them and revenues are down as tenants cannot be evicted. SBA at our rescue again!

  189. Do temp employees a company hires frequently from a tem agency get counted towards the 500 size limit that a company can not exceed.

    Second question: Everything else being equal: Firm A employs 480 $250,000 compensated professionals and business dropped significantly. Firm A employs 1250 low wage earners (say all in $35K) and live paycheck to paycheck. Is it true Firm A would qualify for the full 10 million loan and Firm B would not qualify for anything??? And say you had 500 low earners, as per above, this firm would only qualify for $3,645,833 loan. I am a CFO/CPA and I must be missing something. Firm A, say a group of wealthy workers (not owners) would get a free loan and the workers on a paycheck to paycheck loose their job. Which will not be there after their unemployment runs out because the company could not hold out for things to return to normal. I must be missing something.

    1. You raise important questions and we don’t have an answer. They have appropriated separate funds for helping mid to large sized businesses. These programs are falling under the SBA loan umbrella which usually helps small businesses based on SBA size standards.

  190. Hi,

    I’m an employee who just this week was told my salary would be cut. I asked the owner 3 different times about PPP and he’d convinced the program isn’t forgiven or free. I’m mystified at why we wouldn’t apply or take advantage of the funding. He said there are many calculations and it was complex. I don’t believe any of the legal or loan default disqualifications apply, but that’s my only logical answer at this point. My intuition is they’re preparing to let me go regardless.

    Is there anything an individual employee can do?

  191. I applied for a loan before seeing that the SBA clarified the rules to not include independent contractor payments. Thus, my payroll is too high. There is no way for me to go back into the loan application to modify, so I emailed the bank to let them know I need to reduce the amount of loan requested. I have not yet heard back from them. I’m sure they must have a thousand emails to respond to . . . At this time, they have not yet requested the 941s, etc, and I’m assuming that will be sent at a later date, once I hear back from them. At that time, I am assuming I can then modify the loan requested amount if I can’t do so before then.. Do you think this is the case? I just want to be sure that we do not request more than what we are entitled to and I don’t know how to modify this amount.

    1. I don’t know how your bank will handle it but I wouldn’t worry too much. If you applied before they had that guidance then they know the issue exists as well. You’ll have to get loan documents at some point and you can likely amend it then. Everyone’s trying to navigate this and changes frequently.

      1. Ok, thank you. I figured I could probably just amend the loan requested once we submit the 941s, etc. They still haven’t asked for those. And ya, it’s been pretty murky and fluid. Thank you for all of your input!

    2. Linda I had the same thing happen. I applied and counted my independent contractors before was known that I could not. Now that those provisions were put in I wanted to make adjustments – I cannot. And then boom, the money is in my account. So now what?

  192. I have a small business that will qualify for the Paycheck Protection Program Loan. The form sent to me has boxes to check for payroll, lease / mortgage interest, utilities, and other.

    Does that mean I can include these categories in my calculation of maximum loan OR does it just mean I can use these categories to support the use of the loan I get, as long as payroll is at least 75%?

      1. If I owe back federal taxes to IRS and I’m on an installment agreement for nine years can I still get a ppp loan

  193. One of the requirements to qualify for PPP loan forgiveness is the business must continue to employee all the original employees. How long is the business regard to continue employing the employees once they receive a PPP loan? Is that time frame just two months from when the company is approved for the PPP loan or is the company required to keep everyone employeed the rest of the year to be able to qualify for forgiveness of the PPP loan?

    1. The taxes are from an old business and it’s personal taxes from 2005 and 2006 not business taxes the Leander said you can’t owe personal taxes but. I have a payment agreement for nine years is that sufficient

  194. I’m a single member, LLC. Do I check LLC or sole proprietor? And can I apply now or do I have to wait until the 10th? Thanks!

      1. The article you link to does not answer this question. The application for a PPP loan requires the applicant to choose what type of entity they are, but it does not say which box to check for a single member LLC that reports income on Schedule C.

  195. Thanks for this resource – excellent! One question: I’m a Sole Prop and an Independent Contractor. I recently moved to California from Illinois and planned to build new clients here, but that’s no longer possible – I’m in live events. I’ve filed for unemployment, but I don’t hold out hope for that happening any time soon. I plan to apply for the PPA loan and wonder two things:

    1. If I have a single member LLC, do I need to wait for the April 10 deadline? All of my income is 1099 and I don’t have any regular employees.

    2. How do I determine Payroll for myself? I had between $7,500-$10,000 / month in various income streams and now that’s $1,500. Is there a place for me to validate the income of the past year and then get that forgiven?

    Thanks for any light you can shed on this exceedingly complex issue.

  196. I am a union contractor in California does this program cover the fringes to the union if we are paying our employees even if they are not working.

  197. Do you know when the 8-week period for forgiveness ends? I have seen some claim the 8 weeks must end by June 30th and others claim the 8 weeks must start by June 30th.

  198. Hello, I am a single member Llc. I have not done my 2019 taxes. I had a loss on my 2018 taxes due to some big write offs. What documentation will I be able to use to give to the bank for my PPP loan that shows what I pay myself? It is around $100k per year.

    Thank you!

  199. Thank you for this article.

    It seems like this line is everything:
    “For sole proprietors or independent contractors, wages, commission, income, or income from net earnings from self-employment, or similar compensation.”

    I am a single member LLC. I have (1) 1099 contractor that I pay a monthly payment too, but they are not a W2. We opened in November of 2018 so we actually took a loss with everything we had to invest in last year (2019). Last year I did not pay myself. Everything says put 0 in the box for employees and your net profit in the payroll box. Is this correct? What if the new profit is 0?

    We are a brick and morter crossfit gym in Las Vegas with rent and other overhead costs due right now.

    1. Do you file Schedule C? If so the more recent guidance from the SBA says if you had a loss (line 31 schedule c) in 2019 you will not qualify for PPP. You may want to look into EIDL.

  200. Hello – we have a professional services business set up as a partnership with employees. Employee payroll calcs, I get. Partners dont get salaries but get K-1 income. Is self-employment income from K-1 (with $100k limit) ok to be added to payroll costs?


  201. I own a small, seasonal business with 3 employees. One is full time and 2 part time. Our “Season” [southeastern resort] essentially runs from about June 15 to Labor Day. The 2 sets of Seasonal periods .. 2/15/19 – 5/10/19 [12 weeks] and
    3/1/19 – 6/30/19 [17 weeks] do not cover “Our Season” Is this possible or likely to change – or allow me to pick my 12 week Seasonal period?

    Second question. What is the difference between PPP PPA EIDL ?

  202. My wife is on my company payroll at $3 per hour. Now I moved my business to my house, can I pay my wife $35 per hour and qualify for PPP forgiveness?