Self-Employed: How To Apply For A Payroll Protection Program PPP Loan

Self-Employed: How To Apply For A Payroll Protection Program PPP Loan

Self-Employed: How To Apply For A Payroll Protection Program PPP Loan

Update March 30, 2021: The President has signed the PPP Extension Act. It gives business owners until May 31, 2021 to apply for PPP loans.

One of the more confusing aspects of the Paycheck Protection Program (PPP) is how to apply for a PPP loan if you are self-employed, including if you are a 1099 contractor or gig worker.

Here we will answer common questions we’ve received including: 

  • How do I calculate my payroll or salary if I am self-employed?
  • What if I have not filed my 2020 tax return? 
  • If I had a loss in my business do I qualify? 
  • What expenses may be included in the forgiven amount?

By way of background, the Economic Aid Act (stimulus bill) passed December 27, 2020 includes funding for three types of PPP loans:

  • First time PPP loans for businesses that qualified under the CARES Act but did not get a loan (“first draw” PPP loans);
  • Second draw PPP loans for businesses that obtained a PPP loan but need additional funding; and
  • Additional funding for businesses that returned their first PPP loan or for certain businesses that did not get the full amount for which they qualified.

Read more about new PPP loans included in the Economic Aid Act (the “stimulus bill”) here

We encourage you to review the SBA guidance carefully and discuss it with your tax professional, attorney, or financial advisor to clarify how it applies to your business. 

How To Calculate PPP Loan Amount If You Are Self Employed

Here we are focusing on those who are self-employed and who file a Form 1040, Schedule C. As a reminder, the SBA states you may be eligible for a PPP loan if: 

  • You were in operation on February 15, 2020; 
  • You are an individual with self-employment income (such as an independent contractor or a sole proprietor); 
  • Your principal place of residence is in the United States; and  
  • You filed or will file a Form 1040 Schedule C for 2019 or 2020.

For those who are self-employed and file a Form 1040, Schedule C, the SBA provides separate calculations based on whether or not you have employees. You will find those below.

Update: On March 3, 2021 the SBA released a new Interim Final Rule that applies to PPP applicants who are self-employed.  Prior to this change, self-employed borrowers who file Schedule C used line 31 of their Schedule C (net profit) to calculate the owner’s compensation portion of their loan amount. The new calculation provides more flexibility, allowing borrowers to use net profit or gross income. (If you have already applied for PPP using net profit, see the FAQ below: Can I Request More Money If I Used Net Profit?)

Note: Do not include payments you make to 1099 contractors in your payroll. They can apply for PPP themselves.

First Draw PPP Loan If You Have No Employees

If you are self-employed and have no employees, the SBA provides the following instructions in the March 3, 2021 for new PPP loan borrowers:

If you have no employees, use the following methodology to calculate your maximum loan amount:

Step 1: From your 2019 or 2020 IRS Form 1040, Schedule C, you may elect to use either your line 31 net profit amount or your line 7 gross income amount. (If you are using 2020 to calculate payroll costs and have not yet filed a 2020 return, fill it out and compute the value.) If this amount is over $100,000, reduce it to $100,000. If both your net profit and gross income are zero or less, you are not eligible for a PPP loan.

Step 2: Calculate the average monthly net profit or gross income amount (divide the amount from Step 1 by 12).

Step 3: Multiply the average monthly net profit or gross income amount from Step 2 by 2.5. This amount cannot exceed $20,833.

This is the amount most self employed borrowers with no employees will use to qualify for a first-time PPP loan.

How to Substantiate Your Income (Self-Employed No Employees)

You must provide the 2019 or 2020 (whichever you used to calculate loan amount) Form 1040 Schedule C with your PPP loan application to substantiate the amount for which you applied. You must also include a 2019 or 2020 (whichever you used to calculate loan amount) IRS Form 1099-MISC detailing non-employee compensation received (box 7), invoice, bank statement, or book of record that establishes you are self-employed. If using 2020 to calculate loan amount, this is required regardless of whether you have filed a 2020 tax return with the IRS. You must provide a 2020 invoice, bank statement, or book of record to establish you were in operation on or around February 15, 2020.

First Draw Loan If You Have Employees

If you are self-employed with employees, the SBA provides the following instructions.

Step 1: Compute 2019 or 2020 payroll (using the same year for all items) by adding the following:

a. At your election, either (1) the net profit amount from line 31 of your 2019 or 2020 IRS Form 1040, Schedule C, or (2) your 2019 or 2020 gross income minus employee payroll costs, calculated as your gross income reported on IRS Form 1040, Schedule C, line 7, minus your employee payroll costs reported on lines 14, 19, and 26 of IRS Form 1040, Schedule C (for either option, if you are using 2020 amounts and have not yet filed a 2020 return, fill it out and compute the value), up to $100,000 on an annualized basis, as prorated for the period during which the payments are made or the obligation to make the payments is incurred (if this amount is over $100,000, reduce it to $100,000, or if this amount is less than zero, set this amount at zero); 

b. 2019 or 2020 gross wages and tips paid to your employees whose principal place of residence is in the United States, computed using 2019 or 2020 IRS Form 941 Taxable Medicare wages & tips (line 5c, Column 1) from each quarter plus any pre-tax employee contributions for health insurance or other fringe benefits excluded from Taxable Medicare wages & tips; subtract any amounts paid to any individual employee in excess of $100,000 on an annualized basis, as prorated for the period during which the payments are made or the obligation to make the payments is incurred, and any amounts paid to any employee whose principal place of residence is outside the United States; and

c. 2019 or 2020 employer contributions to employee group health, life, disability, vision and dental insurance (portion of IRS Form 1040, Schedule C line 14 attributable to those contributions); retirement contributions (IRS Form 1040, Schedule C, line 19); and state and local taxes assessed on employee compensation (primarily under state laws commonly referred to as the State Unemployment Tax Act or SUTA from state quarterly wage reporting forms).

Step 2: Calculate the average monthly amount (divide the amount from Step 1 by 12).

Step 3: Multiply the average monthly amount from Step 2 by 2.5. 

How to Substantiate Your Income  (Self-Employed With Employees)

You must supply your 2019 or 2020 (whichever you used to calculate loan amount) Form 1040 Schedule C, Form 941 (or other tax forms or equivalent payroll processor records containing similar information) and state quarterly wage unemployment insurance tax reporting forms from each quarter in 2019 or 2020 (whichever you used to calculate loan amount) or equivalent payroll processor records, along with evidence of any retirement and health insurance contributions, if applicable. A payroll statement or similar documentation from the pay period that covered February 15, 2020 must be provided to establish you were in operation on February 15, 2020.

If you use a payroll processing service ask them for a CARES Act report. It should include that information.

If You are a Partner In a Partnership

The SBA has previously clarified that while partnerships are eligible for PPP loans, a partner in a partnership may not submit a separate PPP loan application for themselves as a self employed individual. (The IFR released March 3, 2021 did not change the calculation for partnerships.) The following methodology should be used to calculate the maximum amount that partnerships can borrow:

 Step 1: Compute 2019 payroll costs by adding the following: 

2019 Schedule K-1 (IRS Form 1065) Net earnings from self-employment of individual U.S.-based general partners that are subject to self-employment tax, multiplied by 0.9235,5 up to $100,000 per partner: 

  • Compute the net earnings from self-employment of individual U.S.-based general partner that are subject to self-employment tax from box 14a of IRS Form 1065 Schedule K-1 and subtract (i) any section 179 expense deduction claimed in box 12; (ii) any unreimbursed partnership expenses claimed; and (iii) any depletion claimed on oil and gas properties; 
  • if this amount is over $100,000, reduce it to $100,000; 
  • if this amount is less than zero, set this amount at zero; 

2019 gross wages and tips paid to employees whose principal place of residence is in the United States (if any), up to $100,000 per employee, which can be computed using:

  • 2019 IRS Form 941 Taxable Medicare wages & tips (line 5c-column 1) from each quarter, 
  • Plus any pre-tax employee contributions for health insurance or other fringe benefits excluded from Taxable Medicare wages & tips, and 
  • Minus any amounts paid to any individual employee in excess of $100,000 and any amounts paid to any employee whose principal place of residence is outside the United States; 
  • 2019 or 2020 employer contributions for employee group health, life, disability, vision and dental insurance, if any (portion of IRS Form 1065 line 19 attributable to those contributions);
  • 2019 or 2020 employer contributions to employee retirement plans, if any (IRS Form 1065 line 18); and
  • 2019 or 2020 employer state and local taxes assessed on employee compensation, primarily state unemployment insurance tax (from state quarterly wage reporting forms), if any.

Step 2: Calculate the average monthly payroll costs (divide the amount from Step1 by 12).

Step 3: Multiply the average monthly payroll costs from Step 2 by 2.5.

How to Substantiate Your Income (Partnership)

The partnership’s 2019 IRS Form 1065 (including K-1s) must be provided to substantiate the applied-for First Draw PPP Loan amount. If the partnership has employees, other relevant supporting documentation, including the 2019 IRS Form 941 and state quarterly wage unemployment insurance tax reporting form from each quarter (or equivalent payroll processor records or IRS Wage and Tax Statements) along with records of any retirement or group health, life, disability, vision, and dental insurance contributions must also be provided to substantiate the First Draw PPP Loan amount. 

If the partnership has employees, a payroll statement or similar documentation from the pay period that covered February 15, 2020 must be provided to establish the partnership was in operation and had employees on that date. If the partnership has no employees, an invoice, bank statement, or book of record establishing the partnership was in operation on February 15, 2020 must instead be provided.

If Your Business is an LLC

How to calculate your loan amount will depend on how your LLC files its taxes. The SBA states that “LLCs should follow the instructions that apply to their tax filing status in the reference period used to calculate payroll costs (2019 or 2020)—i.e., whether the LLC filed (or will file) as a sole proprietor, a partnership, or a corporation in the reference period.”

If Your Business is an S Corp

If you are self-employed and your business operates as an S Corporation, you may qualify based on payroll (including payroll you pay yourself). However, if you only pay yourself compensation through owner’s draw or distributions, you may not qualify. We recommend you read: Does Owner’s Draw Qualify as Payroll for the PPP Program?

Second Draw PPP Loans

The stimulus legislation created second draw PPP loans for those who:

  • Previously received a first draw PPP Loan and has or will use the full amount only for authorized uses by the date the second loan is disbursed;
  • Have no more than 300 employees; and 
  • Can demonstrate at least a 25% reduction in gross receipts between comparable quarters in 2019 and 2020.

More information about qualifying for a second draw PPP loan can be found here.

The calculation for second draw loans is similar to first draw loans with one exception: if your business has a NAICS code beginning in 72 (which is generally food service and accommodations businesses) you may qualify for a loan of 3.5 times average monthly payroll. Other businesses will qualify based on 2.5 times average monthly payroll as before.

The March 3, 2021 Interim Final Rule describes the following method for calculating the loan amount: 

“The maximum amount of a Second Draw PPP Loan to a borrower that has income from self-employment and files an IRS Form 1040, Schedule C, is calculated as follows, depending on whether the borrower has employees:

(i) For a borrower that has income from self-employment and does not have any employees, the maximum loan amount is the lesser of:

(A) the product obtained by multiplying: (1) the net profit or gross income of the borrower in 2019 or 2020, as reported on IRS Form 1040, Schedule C, that is not more than $100,000, divided by 12; and (2) 2.5 (or, only for a borrower assigned a NAICS code beginning with 72…at the time of disbursement, 3.5).

This amount cannot exceed $29,167 for NAICS code 72 borrowers and $20,833 for all other borrowers.

(ii) For a borrower that has income from self-employment and has employees, the maximum loan amount is the lesser of: (A) the product obtained by multiplying:

(1) the sum of (i) one of the two following options, up to $100,000; if this amount is less than zero, set this amount at zero (if you are using 2020 and have not yet filed a 2020 return, fill it out and compute the value):

  • the borrower’s net profit reported on IRS Form 1040, Schedule C for 2019 or 2020, divided by 12;
  • or line 7 from the borrower’s 2019 or 2020 IRS Form 1040, Schedule C, minus lines 14, 19, and 26, divided by 12; and

(ii) the average total monthly payment for employee payroll costs incurred or paid by the borrower during the same year elected by the borrower; by (2) 2.5 (or, only for a borrower assigned a NAICS code beginning with 72 at the time of disbursement; or (B) $2,000,000.

What If I Have Not Filed my 2020 Tax Return for My Business?

The SBA does not state that you must file your 2020 tax return before you apply. The good news is that if you want to qualify based on your gross income (line 7), you’ll only need to complete lines 1-7 of your Schedule C  to get that number used to calculate your loan amount. For many independent contractors, self-employed individuals and gig workers, that should be pretty simple. You’ll find Schedule C instructions here. (Be sure to check with your tax professional if you have questions.) 

Here’s what that first section of Schedule C looks like: 

First section of the schedule C


Alternatively you may use information from your 2019 Schedule C to qualify instead. 

What If My Business Showed a Loss? 

Prior to the March 3, 2021 change, if you were self-employed and did not have employees, your business must have showed a net profit on either your 2019 or 2020 Schedule C to qualify for PPP. Now your business must show gross income or a net profit to qualify. Self-employed individuals with employees may also qualify based on payroll plus owner’s compensation using the methods described above. More businesses are likely to qualify for PPP using the new calculation.

Can I Request More Money If I Used Net Profit? 

If you applied for PPP as a self-employed individual using net profit, you may discover you could get a larger loan by using gross income. The change in calculation methods is not retroactive. The IFR states that it applies to “loans approved after the effective date.

However, it appears that whether you can get a larger loan amount depends on the status of your loan. Information provided by SBA to lenders states that a lender may cancel a PPP loan application and submit a new application on behalf of the borrower all the way up to the point where the loan funds have been disbursed to the borrower but a Form 1502 (reporting the loan) has not been submitted by the lender to the SBA. (The borrower would have to repay the loan first.) 

Once the loan has been disbursed and the lender has filed Form 1502 with the SBA, there is no option to reapply for a larger amount. 

Contact your lender if you have already submitted a loan application based on Schedule C net profits and have questions about the new calculations. 

Keep in mind that if you already qualified based on the maximum owner’s compensation of $20,833 based on net profit on your Schedule C there is no need to do anything. (For second draw loans to businesses with a NAICS code starting in 72, the maximum amount based solely on owner’s compensation is $29,167).

Is There a Downside to Using Gross Income Instead of Net Profit? 

Possibly.  PPP borrowers must certify that “current economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.” However, there has been a “safe harbor” for loans below $2 million.

The SBA appears to be concerned that the gross income calculation may be more subject to fraud or abuse. So it has warned that  “if a Schedule C filer elects to use gross income to calculate its loan amount on a First Draw PPP Loan and the borrower reported more than $150,000 in gross income on the Schedule C that was used to calculate the borrower’s loan amount, the borrower will not (emphasis added) automatically be deemed to have made the statutorily required certification concerning the necessity of the loan request in good faith, and the borrower may be subject to a review by SBA of its certification.”

It goes on to say that “SBA will review a sample of the population of First Draw PPP Loans made to Schedule C filers using the gross income calculation if the gross income on the Schedule C used to calculated the borrower’s loan amount exceeds the threshold of $150,000. If the borrower exceeds this threshold, then SBA will, for the sample drawn, assess whether these borrowers complied with the PPP eligibility criteria, including the good faith loan necessity certification.”

Although second draw PPP loan borrowers must still make the economic necessity certification, the SBA does not appear to be as concerned about these applicants, since they must demonstrate a 25% reduction in receipts. It says: “all Second Draw PPP Loan Borrowers will be deemed to have made the required certification concerning the necessity of the loan in good faith.”

What Is the January/February Period I’ve Heard Referenced?

The CARES Act became law March 27, 2020 and in the first round of PPP, self employed business owners did not get instructions on how to calculate payroll right away. When the guidance did come out, it did not include instructions for businesses that weren’t in business in 2019 but were in business by the deadline of February 15, 2020 required to qualify. 

Later the SBA provided instructions for businesses that were not in business in 2019 but were in business in January and February 2020. Those instructions generally allowed those businesses to calculate their loan amount using their average monthly payroll costs incurred in January and February 2020. This calculation is still an option, or the business may use all of 2019 or all of 2020 to qualify. For details on how to calculate the January/February option, see the SBA guidance dated January 17, 2021: Questions 10 & 11.

Can I Use PPP to Refinance My EIDL Loan?

Some borrowers have received both a PPP loan and an Economic Injury Disaster Loan (EIDL). There are some very specific but limited circumstances where you can refinance an EIDL loan with PPP. (Note we are talking about an EIDL loan here, not the EIDL grant or advance.) Pay careful attention to the dates here! 

  • You must use PPP to refinance your EIDL if you received EIDL loan funds from January 31, 2020 through April 3, 2020; and used the EIDL loan funds to pay payroll costs.
  • You may (optionally) use PPP to refinance EIDL loan funds received from January 31, 2020 through April 3, 2020; and you used the EIDL loan for purposes other than payroll costs.
  • You cannot use PPP to refinance an EIDL loan if you received EIDL loan funds before January 31, 2020 or after April 3, 2020. This is the majority of borrowers. 

What Else Do I Need to Apply?

In addition to the tax documents you used to calculate your loan amount, you will need the following documentation: 

  • A copy of your driver’s license or passport. 
  • A voided check for the deposit of your PPP loan. Some lenders require you have a business bank account. If you don’t have one, we recommend opening one so your PPP funds can be deposited into that account. This will make it easy to track how you spend PPP funds. 
  • For second draw PPP loans you must have the number from your first PPP loan. SBA loan numbers (PLP) have eight numbers followed by a dash then two more numbers (i.e., XXXXXXXX-XX).

What Expenses Can I Use My PPP Loan For? 

It’s important to spend your loan proceeds correctly if you want to qualify for full forgiveness. The SBA has established some very specific guidance regarding the use of PPP loan proceeds for those with income from self-employment who file a Form 1040, Schedule C. 

With the new rule the SBA introduced a new term called “proprietor expenses” and describes it like this: “In the context of determining a borrower’s eligible expenses and forgiveness amount, this interim final rule refers to the owner compensation share of a Schedule C filer’s loan amount as ‘proprietor expenses’.”

PPP is intended to keep workers on payroll, and that may include compensation for self-employed individuals. In fact, full forgiveness generally requires the business to use at least 60% of PPP funds for payroll related expenses during specific time periods. The March 3, 2021 guidance from the SBA describes it this way: 

  • For borrowers that use net profit to calculate loan amount, owner compensation replacement, calculated based on 2019 or 2020 (using the same year that was used to calculate the loan amount) net profit. 
  • For borrowers that use gross income to calculate loan amount, proprietor expenses (business expenses plus owner compensation), calculated based on 2019 or 2020 (using the same year that was used to calculate the loan amount) gross income (this amount cannot exceed $20,833).
  • For borrowers who used gross income to calculate the loan amount and have no employees, proprietor expenses equal gross income. 
  • For borrowers who used gross income to calculate the loan amount and have employees, proprietor expenses equal the difference between gross income and employee payroll costs. 

For businesses with employees, payroll may also include employee payroll costs for employees whose principal place of residence is in the United States.

In addition, borrowers may qualify for full forgiveness if they use up to 40% of PPP funds for other eligible expenses during the covered period. These include:

  • Mortgage interest payments* (but not mortgage prepayments or principal payments) on any business mortgage obligation on real or personal property (e.g., the interest on your mortgage for the warehouse you purchased to store business equipment or the interest on an auto loan for a vehicle you use to perform your business), 
  • Business rent payments (e.g., the warehouse where you store business equipment or the vehicle you use to perform your business), and
  • Business utility payments (e.g., the cost of electricity in the warehouse you rent or gas you use driving your business vehicle). 
  • Interest payments on any other debt obligations that were incurred before February 15, 2020 (such amounts are not eligible for PPP loan forgiveness). 
  • The stimulus legislation created a new category of covered expenses that may be included in non-payroll costs. We detailed those in this article about the new PPP loans. These expanded expense categories apply to anyone with a PPP loan that has not yet been forgiven, even if you received it in 2020.

*Note that you must have claimed these expenses on your Form 1040 Schedule C to include those costs for forgiveness purposes.

For many self-employed individuals, PPP loan forgiveness will be based largely or entirely on owner’s compensation replacement. We discuss this in detail in our article: Self-employed: How to Fill Out the PPP Forgiveness Application.

The Bottom Line on Applying for PPP When Self-Employed

If you qualify for PPP,  by all means be sure to apply. This loan may be fully forgiven and may provide essential funding to your business.

That said, it will be a lot easier to apply for PPP if your bookkeeping is up to date and you have kept good records of the income and expenses of your business. If you have operated your business with cash payments that you did not report to the IRS, co-mingled personal and business funds, or if you have maximized expenses to the point where your business only shows a loss, you are likely not going to be able to qualify for the PPP loan your business may have been entitled to otherwise. Your accounting professional can prove invaluable in this process so make sure you enlist their help in determining which COVID relief programs are best for your business.

This article was originally written on April 14, 2020 and updated on June 2, 2022.

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328 responses to “Self-Employed: How To Apply For A Payroll Protection Program PPP Loan

  1. Good Morning . I had a quick question regarding PPP . My dad is going on 72 years young and he is barely able to make payroll for his employees . He is paying out of his pocket if he can afford it . He has 9 poultry houses and is not making any money at all . Is there anything you can tell me that he apply for and get with the PPP ? Thank you for your time . Jason

    1. I’m sorry but PPP is closed. I’d encourage your dad to connect with his local SBA resource partners (SBDC)/ SCORE etc. to get free assistance and to find out about local programs that may be available to him.

      1. I got first and second rounds deposited to my personal checking account in February 2021, because I’m a sole proprietor. I was fully forgiven September 1, 2021 and in April 2022 my bank decided to send 26k which was my personal money of the [ fully forgiven 32k ppp ] back to harvest small business finance without my permission because the bank says i can’t get a business loan in my personal account. I’ve been fully forgiven and the funds were used for the correct intended purposes and also mind you now, it’s been over a year that I’ve received the funds into my personal account without any issues whatsoever. Where is my money? Where how man

  2. You said:You must provide the 2019 or 2020 (whichever you used to calculate loan amount) Form 1040 Schedule C with your PPP loan application to substantiate the amount for which you applied. You must also include a 2019 or 2020 (whichever you used to calculate loan amount) IRS Form 1099-MISC detailing non-employee compensation received (box 7), invoice, bank statement, or book of record that establishes you are self-employed. If using 2020 to calculate loan amount, this is required regardless of whether you have filed a 2020 tax return with the IRS. You must provide a 2020 invoice, bank statement, or book of record to establish you were in operation on or around February 15, 2020

    I have bank statements showing I was paid as an independent contractor but because Im an s-corp, they dont give me a 1099 form. I did FORMAL PAYROLL for 2020 with my ppp money but now the bank is saying I should have never received the loan(and therefore I cant get forgiveness) because I dont have a schedule c for 2019. I have k-1s. In your instructions above, you said we could use bank statements. Do you know if the sba agrees with that? Do you have any advice for me?

    1. My understanding is that if you pay yourself with formal payroll you may apply for the loan and forgiveness based on that. (You’re right – S Corps often file a K-1.) The SBA has just announced a hotline for PPP questions. I’d encourage you to call them asap and see if you can get some help. Here’s the info: If you have questions or need help with PPP forgiveness, call the SBA’s PPP customer service team at (877) 552-2692, Monday – Friday, 8 a.m. – 8 p.m. EST.

      1. Thank you for your reply. They said I have no problem qualifying for forgiveness but because I shouldnt have received the loan in the first place, I cant get forgiveness. What do you suggest?

        1. Again, I’d suggest talking with the SBA and see if they can help. Other than hiring legal counsel to challenge the bank’s assessment I’m not sure what other options there are. Hopefully the SBA can help.

          1. The ppp hotline info you gave is GREAT! They answer immediately. They only deal with forgiveness though . Do you know how I can talk to someone at the SBA? Calling the sba number will get you nowhere. I read the instructions for filling out the application for the loan and it looks clear that the bank was correct in giving me the loan. I cant pay $5000 for a lawyer for a $13000 loan. Thank you for all of your help. I just need to know if the sba will accept bank statements showing indep contractor income for 2019 or if it HAS to be a schedule c or 940/1.

          2. I’m glad to hear that Ja Do! And I can understand not wanting to hire an attorney. Three thoughts: 1. Try your district SBA office. 2. Try your elected officials in Washington. They have staff who get involved with constituent problems with government programs. 3. Do you have a local consumer assistance reporter who might help? (FYI I tried to email you.)

  3. I received the first PPP and upon applying for the 2nd round, it was my understanding I could be compensated since I work day and night by using my schedule c. not true my lender waited till the last day to inform me that he felt as though I was not entitled to more funding and that I had one of two options either accept the same amount from 1st PPP or go apply at another lender. knowing that would be impossible since it was the last day to apply. What choice was this knowing my company was already suffering a 45% decrease in revenue and trying to keep everyone on the payroll, I accepted what was available and not what I was legally entitled to according to the SBA.
    I needed that $25,000 he denied me from having but I guess being a Hispanic Women Business owner my contribution did not count in his eyes. He disagreed and felt I was not entitled to the additional funding. Unbelievable ! I have submitted my loan forgiveness immediately since I kept all my employees on staff every penny went on payroll and I still have no answer. I am terrified that getting the PPP was not in my companies best interest. I have managed to be in business since 1968 with my husband and in 2006 taking it over by myself had the SBA not been there I would not have made it thru, So for this, I am truly grateful for the help I did receive.

    1. I’m so sorry to hear how difficult this has been for you. Good for you for hanging in there. The SBA will be announcing a new forgiveness portal soon, so hopefully that will make it easier for you to qualify for forgiveness.

  4. Has the date for the ppp loan passed? If not am I understanding that you have to have a small business loan that you are paying and that you can use the ppp loan to pay the loan off? What if you don’t have a small business loan, but was unable to do your job due to co-vid restrictions and need to just pay your self.

  5. I haven’t received a payment but it says that I was approved on may 28.I have the loan number. Is there any kind of way I could find out what happened or call

  6. Hello
    I haven’t received any payment but it says that I was approved on the 28 of June. Is there any kind of way to find out what happened to it

  7. I have applied somewhere else and they say they are looking at my info. It’s been months yet to hear. Can I reapply

  8. Hello, the form I am filling out for the PPP as a self-employed sole proprietor with no employees asks for the line 7 or gross divided by 12×2 1/2. It then asks for EIDL amount. I have been looking for Instructions for this. The only reference I have seen is your video which says that it is no longer part of the equation. Do I just write a zero into that EIDL space? Thank you

  9. I sent in a question a little while ago but somehow it disappeared on here I am self-employed with no employees. I read on here a little while back that a person could qualify showing a 25% reduction in one specific month is that true and I did not receive a first p p p loan. Also I saw on here that a person had gone to a few different lenders and no one had heard of the 25% reduction thing can you pair me with someone who does know about that. Cuz that’s how I would go about it. I have bank records and everything that shows my 2020 business income.

    1. Tom – I replied that I am not aware of a 1 month window for the 25% reduction. My understanding is it is one quarter in 2020 compared to 2019 or annual (2020 compared to 2019). I haven’t seen anything that talks about a 1 month reduction.

      If you did not get a first ppp loan then it doesn’t matter. You will apply for a first draw PPP loan and that does not require the 25% reduction in revenue.

      However, if you are going to apply I suggest you do so asap. There are very limited funds available and they could run out before the program officially ends May 31, 2021.

  10. I am self employed as a babysitter I also translate and I also help people do thier taxes and sometimes other legal paperwork. My bank account was closed around February 2021 and I open a new account wid suntrust. Also my bank statement from 2/20 has my maiden name on it n my id has my married name what do I do to fix it

    1. Tammy – I don’t know how to advise you. I don’t know what you mean by fix it. Fix what? Your bank statement? I doubt you can change that but you may be able to supply the lender with information to confirm that’s your previous name. My best advice is to talk to your lender.

  11. Hi Gerri,

    1) I’m a 1099 subcontractor, I have received my first draw. My question that no one can seem to answer is, what can I spend the money on? I’ve read you can pay yourself but I’ve not been able to get any clarification on what that means. Do I need to keep records of what I spend it on?

    2) You have to apply for forgiveness?


  12. If one has already filed their 2019 and 2020 Form 1040 taxes but did not do so with a Schedule C, can they still apply and qualified for the PPP? They used a Form 1040 but did not use W-2’s.

  13. If my business is ran on the side and I do it when I can as a sole proprietor accepting only cash payments because I deal with the public meeting them one on one either picking up inventory or selling the then new inventory after I have fixed it, how is it that I don’t qualify it my losses and my expenses, same for my gains and profits? I only take cash because I work through social media and I recently had my identity stolen. Another reason is that I will have people wanting things and set up a time but they never show up. I accept paypal but the hard truth is most don’t have that. Is there no way around that?

    1. Are you paying taxes on that income by reporting it on Schedule C with your tax return? If so you may be able to use your tax records to apply. As for your business, going forward, you can accept cash but it’s a good idea to deposit it into a business bank account so you have records of your revenue.

        1. If you’re talking about a PPP loan, that program is closed to new applications. For other business loans you may not need a business bank account but it can be very helpful.

  14. I’ve applied through womply, I’m an independent contractor/Instacart+Uber grocery/meal delivery guy. 1099 IC. I was approved for first draw with Harvest as the lender. I have a “Funding Problem”, according to womply, they tried to send the funds via ACH and the payment was returned. Bank details incorrect or the bank rejected the payment.

    I’m on hold with the bank now and assuming the problem is that my bank account is personal, not business. The document upload from Feb 2020 proving I was in business is from this account. How do I receive funds when all I have is a personal checking account?

  15. Hi Gerri,
    Thank you so much for helping everyone with all of these questions!
    Last yesr when all of this happened we were in the middle of a move only to find out that the people renting the house we were buying decideed not to leave, which set off a whole chain reaction untill August. I am a sole propritor in the travel and hospitality field. I filed my schedule c on time, but moved 3 times in 5 months. I applied for an EIDL loan and was offered 25,000, I chose to only take $14,000.00. Now I can not find any of the information I had for my 2019 taxes and was sent a letter that I can apply for more, up to $103,000.00. I”m not sure what to do. I do not have any collateral, except my computer and car, but could use more funds for advertising.
    Another question is that my huby has
    always helped me and I don’t know if I put him down as an emplyee (all others are sent 1099’s), and we knew he was going to be eligable for ss starting in Aug. What shoud I do? Where can I find my original application? Does it matter?
    Thank you

  16. Can I apply for PPP if I have a 1099 ? I work with a nursing agency ? I commute 3 1/2 hours from Vegas to California since June of 2019 . Also I have bank statements ect

  17. I didn’t start my gig worker job until Sept 2020. I filed my 1099nec under 1040 schedule 1. Do I qualify?

  18. if someone worked under the table can they qualify for the ppp loan ? Or if they worked without a business liscense.

    1. A business license is not necessarily required but if you did not report your income to the IRS you will not be eligible.

  19. I have been on 1099 since August 2019 and deposits were made in my baby mother’s bank account up until April 2020. I do not have any bank statements prior to May 2020 in my name.

  20. Hi, I own my LLC/Partnership for 4 years but never took payroll or a draw, Can I still get a PPP loan? thanks

  21. I have a small business since last year but I have not filed it on either of my taxes. Can I still file for the ppp?

    1. Megan – Your business must have been operational by February 15, 2020 to apply for PPP. If you were and you will file you may use gross income (line 7) from your tentative Schedule C but you need to at least prepare that so you can apply for the correct amount. I’d suggest you try to get caught up on your business taxes asap of course.

  22. I’ve attempted to apply for a PPP Loan but was told i didn’t qualify by my bank because I’m an LLC that hasn’t shown a profit on my 1065 tax form.
    What more can I do to hopefully get a better result.

    1. Dwayne – perhaps you want to try another lender. The SBA changed the calculation for self-employed individuals who file Schedule C. As I mentioned in the article you may now use gross income (Line 7 on Schedule C) rather than net profit. Nav will match you to lenders making PPP loans using that formula. Get started here.

  23. I applied for the second draw yet my bank denied me indicating payroll documentation provided did not substantiate requested loan amount. What does that mean? I’m a sole proprietor. I requested the maximum loan amount.

  24. Hi. I have been self employed since December 2019 I have not filed my 1099 yet. And the proof I have for pay is my recites. Would I still qualify

    1. Billie – Since you can apply based on gross income you should absolutely try. I’m not sure what you mean by receipts though – what kind of receipts? 1099s? I do recommend you at least fill out a tentative Schedule C. It shouldn’t be too hard but if you have questions an accounting or tax preparation service can help.

  25. Hi I filled the ppp for 2020 and after that I realized that i was able to fill the ppp for 2019 which gonna be much prophet for me !
    My question is can still apply again for the 2019 ppp ?!
    Is there anyway that I can fix this and have my ppp for 2019 instead of 2020?!

    1. Noor – If you have already submitted your application to a PPP lender you must ask them to help you change your application. Reach out to your lender. If the loan has not been approved by the SBA it may be possible.

  26. Hey gerri my name is Nounagnon Im a self employed since 2 years but the problem is I never filed taxes because I didn’t have a SSN but now I’m a permanent resident but my wife get a w2 and she files the taxes jointly for 2020 so please tell there anyway I can get the PPP or any type of loan to start my business. Thanks hope Roy reply

    1. Unfortunately if you did not file a tax return reporting your self employment income (I believe you could use a TIN or EIN instead of a SSN) then I don’t see how you will not be able to get PPP based on that self employment income. If you are looking for startup financing for your business I recommend you watch our youtube video on that topic.

      Have you considered filing an amended return with your Schedule C for your self employment income from prior years? That may make you eligible for PPP. (I can’t say it WILL – that will depend on your specific situation.)

  27. Hello! I have a unique (?) situation. I am an business owner (LLC, I’m the owner and the only employee). I am also an independent contractor for a separate company completely unrelated to my business. When I do work for them, they pay ME, the contractor, not my business. In 2020 I applied for the second round of PPP for MY small business. I was approved and since then already submitted my forgiveness documents/requests (which were also approved, yay!). I know MY business does not qualify for the second wave of PPP as I show no quarterly or gross income loss between 2019 and 2020, so I’m not interested in applying again for that business.
    However I am also a 1099 receiving independent contractor for a completely different company. I worked as a contractor for them in 2018, 2019, 2020, and 2021. I have my 2019 and 2020 1099s available now so I can compare my 2019 contractor income to the 2020 contractor income. My work was in nursing homes so as you could imagine I lost a significant amount of income in 2020 compared to 2019 as a contractor (over $10K. the increase in my business profits DID not cover that amount of overall income loss!). I never collected unemployment and both entities (my business and me the independent contractor) are filed on separate Schedule C’s in my tax return. I would like to apply for the PPP based on my now known independent contractor losses, but every time I apply I am asked if I own a business that already received PPP. When I’ve answer yes, in other application sites, I am not allowed to proceed with the PPP application. How do I move forward with applying under independent contractor status without the business owner status getting in the way?? Any advice as to where I should go or what I should do??
    Thanks in advance.

    1. It’s confusing no doubt. The SBA guidance doesn’t provide a lot of specific information on applying for PPP for multiple businesses. It sounds to me like you are describing a situation where you apply for PPP with two different businesses: the LLC and your independent contractor business.

      Do those two businesses have different EINs or TINs? Different addresses? If the information is the same I anticipate you’ll run into problems and it may not be something a lender can even help with as it could create hold codes with the SBA. (The SBA is trying to avoid duplicate PPP loans which have been a problem in the past.)

      Since your independent contractor business did not apply for PPP the first time around you my understanding is that it would be requesting a first draw PPP loan not a second draw PPP loan since you didn’t get one before through that business. Remember that owner’s compensation for that first PPP loan can’t exceed $20,833 combined.

      Also I am not 100% certain on all of this since it’s a scenario not clearly addressed in the guidance. My best advice is to reach out to your SBA district office to see if someone there can advise.

      Going forward, is there any reason why you can’t bill your independent contractor business through your LLC? Or consider depositing funds you earn as an independent contractor to your LLC account so it all goes through the LLC? You may want to talk with your accountant to determine what makes sense.

      1. Thank you. The independent contractor deal and the business/private practice I own are completely separate. My private practice business/LLC has its own EIN, its own address, its own bank account.

        As a contractor, it is me (the person/professional with the title) who is hired to do the work. In that respect I’m a sole proprietor – I never legally established “myself as contractor” as a separate business. When the contracting company pays me, they pay me the person/professional, directly and my payments are deposited into bank account completely separate from my business LLC.

        Regarding contracting my LLC, I’m not allowed to use my LLC as the “contractor” with the contracting company because they they don’t contract other practices (like my private practice) to do contract work, only individuals (partly because they have a private practice division). It’s even written in my contract that neither I (the person) nor any business I own (like my practice) are allowed to take on clients or companies *they* have a relationship with as my own, under my name, or under my business name. So everything is and has to stay completely separate (im ok with that!)

        My owners compensation for that first PPP distributed to my LLC business was under 5K. I’m way under the $20K threshold, even if I were to get the PPP approved for myself as independent contractor, per estimations, it’d be about 3K, so combined (LLC and contractor PPP) wouldn’t even touch 10K. That being said after such a huge financial independent contracting income loss, I could seriously use that 3K.

        Anyway, I knew my situation was unique, lol. Thanks again. I’ll accept any other advice you have and I’ll reach out to the local SBA for help!

  28. Hi – thank you for this. I received my first draw PPP loan this month (a few days ago). I’m a self employed 1099 filer. I’m wondering if I can apply for the 2nd draw before the May 31st?

    1. You may apply if you qualify. Keep in mind that when you fill out the application you must initial the following: “The Applicant received a First Draw Paycheck Protection Program Loan and, before the Second Draw Paycheck Protection Program Loan is disbursed, will have used the full loan amount (including any increase) of the First Draw Paycheck Protection Program Loan only for eligible expenses.” The SBA hasn’t provided detailed information on this timing issue so you may want to get advice on how to ensure you use your proceeds correctly to qualify for forgiveness.

  29. Hi. I’m just starting a new small business that will be opening up in April 2021. Do I qualify for a PPP loan? I will not have any employees.

    1. You may Nikki! Take a look at the instructions in this article and if you believe you qualify based on your gross income OR net profit (your choice – you can also choose 2019 or 2020) get your application submitted. Nav matches borrowers to PPP lenders. Start here.

  30. Great information here and much easier than trying to read the IFR. I am a seasonal business (lawn care) and file a schedule C. I’ve been unclear on if I can file as seasonal or not. I do not have any employees. Have you seen any clear guidance on this?

  31. I apologize if this question has been asked prior but you have several hundred comments and I wasn’t able to find anything similar in the comment thread. I am a business owner, an online platform; Etsy. My wife and I file as a joint venture for tax purposes only (we are not a legally filed JV) as I use my name as the business. We both participate in the business so we file with 50% ownership on our individual schedule c’s splitting our gross income and business expenses. For 2019 I received a 1099k from Etsy showing a gross income of $105,000, with my name on it only. So on each of our schedule C’s (line 7) shows $52,000. The application from the sba for the ppp for is geared toward self-employed with a single C using their gross, not for “self-employed JV” where the gross is divided between the spouses. I have found several articles over the last few days in regards to this issue, a bulletin specifically released from the SBA on March 15th, updating this issue however direction on what to do with an actual application from a lender is vague. I have no idea how to show the gross income on a PPP app where it shows the full $105,000 versus what is on line 7 of each of our sch C’s. I was really hoping you might have some insight on how to navigate this issue. Thank you in advance for your time!

    1. Unfortunately the SBA guidance doesn’t always specifically address every scenario. So this may be one where you simply have to apply then try to talk with the lender to make sure your application is processed correctly. Lenders have access to some SBA resources that small business owners do not, and that may help them get an answer. The other option is to reach out to your SBA District office to see if they can help.

  32. My company meets the requirements for seasonal business. If we choose 12 consecutive weeks in 2019 that the sum is 73,000, do we divide the 73k by 3 (months) and then multiply by 2.5 ( not restaurant) which results in 60k loan amount … OR do we take 73k divide by 12 and then multiply by 2.5 resulting in 15k ? simple question with big difference. thanks

    1. Daniel – There is a lot going on here. First, LLCs will calculate their loan amount differently depending on how they file their taxes. If you are filing Schedule C then you may qualify based on gross revenue line 7. The maximum loan amount caps out at $100K in annual compensation (or $20,833 for owner’s compensation) so the way I understand it based on your later comment that you are self-employed without employees you can’t get a $60K loan just based on your own compensation. But you may be able to get the $20,8333 maximum amount if your lender can work with you to qualify you under the seasonal calculation. I say “if” because I haven’t seen anything in the guidance that includes the seasonal calculation based on gross income. Talk to your lender – they will want to help you get the maximum loan amount if they can but understand the SBA guidance doesn’t address every scenario.

  33. It goes without saying that there’s no shortage of PPP media outlet coverage and its been challenging to stay abreast of all the guidelines, changes and options. Compliments on this article for its attention to all the right up-to-date details. I’ve read so many articles but none as through as this reporting.

    1. The IFR says: “This provision prohibits an entity that has gone out of business and has no intention of reopening from receiving a PPP loan. The Administrator, in consultation with the Secretary, has determined this provision is necessary to maintain program integrity, prevent abuse, and prevent PPP loans being made to businesses that have permanently closed. Preserving funds for businesses in operation is necessary because only businesses that are still in operation will retain employees, which is a primary purposes of the PPP. PPP was not intended to support businesses that have permanently closed. A borrower that has temporarily closed or temporarily suspended its business but intends to reopen remains eligible for a PPP loan.”

  34. Why hasn’t the sba made the application for the new guidelines available to lenders? It’s great that everyone is talking about it, but the truth is, that the sba still isn’t accepting these new applications. Chase bank is telling sm businesses that if you want these new loans, you will need to go to another lender. This is a complete joke on small businesses that desperately need these funds

      1. Are they are accepting and submitting the applications for the schedule C line 7 loans? If so, you are the first and only (that I know of ) that are. Can you please make sure?

  35. If I have two self-employment businesses, can I apply for a PPP loan for each one? I primarily make my income from ‘Business A’, but I did make some extra income from ‘Business B’. I have all the expenses and receipts/invoices to back up both businesses. But, if I can only apply for one, naturally I’ll choose Business A.

    1. Do you file separate Schedule Cs for each business? If not, it’s easy – you just use your Schedule C. If you file separate Schedule Cs for these businesses (and assuming your businesses are NOT S Corps or Partnerships which follow different calculations) then it’s possible to use information from both to qualify for the maximum loan amount. You will still be limited to a loan amount based on a total of $100,000 annually for owner’s compensation/proprietor expenses. (maximum loan of $20,833 for an individual based on $100,000 gross revenue or net profit.) If one business doesn’t give you enough income to qualify for the full loan amount it may be possible to use both but you’ll need to make sure you the lender can handle the multiple Schedule Cs. This is based on my understanding and not legal or financial advice.

  36. Great article!
    Quick question (s):
    1) I originally got a PPP Loan in April however I decided to return it and have it rescinded because the unemployment benefits suited me better at the time (I only collected unemployment a few weeks). Since I gave it back, if I apply now would this be my “First Draw”?
    2) If I made more in 2020 then 2019, am I still eligible? (I would have made much more without COVID) (Also would it be wise to use my 2020 tax return instead of my 2019 return since I made more?)
    3) If I apply now, when does the “covered period” (8 to 24 weeks) start? The origination date of the loan (in 2021) or some date in the past?
    Any help is greatly appreciated. Thanks again for a wonderful article.

    1. The IFR states: a. If a borrower returned all of a PPP loan, the borrower may reapply for a PPP loan in
      an amount the borrower is eligible for under current PPP rules. (The way I read it that means you can use either 2020 or 2019 and you’ll have the more flexible covered period of any period between 8 and 24 weeks.) Whether you apply with your first lender or with a new lender depends on how the loan was reported. See pages 3 & 4 of this guidance.

  37. My husband’s cell phone still has a Colorado # but we reside in Mississippi; will this hinder the loan process as far as connecting him with local lenders?

      1. I lost my work as owner operator taxi driver in a Taxi company because lack of work.Can I have chance to get PPPLoan? Thanks.

  38. The new rules fir Self Employed goes by Gross Income not Met anymore. This article is not updated at all

    1. Update March 4, 2021: We updated this article with the new IFR.

      Previous response: I am responding to your comment at 9:35 am ET on March 2, 2021 and the new IFR has not yet been published. Unfortunately we’ve learned from past experience that the rule that gets published may look different than what was expected, and so I do not feel comfortable publishing specifics until we see the actual guidance. It should be very soon and we will update this article as quickly as possible. (We did publish a video on what we know so far.)

  39. I have both W2 and 1099 as a side business. I am currently getting pandemic unemployment from my W2 job, would I still qualify for this PPP loan as a self employed?

    1. It’s possible yes. I assume you report your 1099 income to the IRS on Schedule C? If so then that’s what you would use to calculate your loan amount. However, Treasury has warned that PPP can impact unemployment so the assumption seems to be you would have to report your forgiven PPP loan to your state unemployment agency during the time you are using it to pay yourself. Unfotunately, we have not seen detailed guidance on exactly how this works so you’ll have to navigate it with your state unemployment agency.

  40. Husband worked 2 independent contractor jobs in 2020. We’re doing our taxes through Turbo Tax. They put each job on it’s own Schedule C. How does he calculate the amount the SBA is asking for? Does he add line 31 from each schedule C and use that total or? Also, all his earnings were auto deposited into our joint bank account. Will that present a problem?

    1. Erin – Yes my understanding is he can add them together but they can’t exceed the equivalent of $100,000 annually total. However, today is Wed. Feb. 24th. It looks like the formula for Schedule C self employed is about to change from line 31 to line 7. We are awaiting guidance from the SBA and will update this article as soon as we have it. Some lenders are requiring a business bank account but it’s not a program requirement per se. It would be wise for him to consider opening one going forward if he is going to continue to work as a self-employed independent contractor.

      1. My husband is owner and sole employee with an SCorp. The newest PPP form 2483-SD-C states only 1040 sched. C can be used to calculate gross income. Is there another form to use since he uses form 1120-S ? Is it correct on the 1120-S that he will use line 6 (total income) or line 3 which is same number (gross receipts minus cost of goods sold) to do the calculation total ÷12 t..amt × 2.5..not to exceed $20,833?
        Second question..
        What if he ends up having to close the business after receiving this 2nd PPP?
        Can u still apply for forgiveness if closed provided the funds were used properly?
        Thank you this is all so stressful and confusing!

        1. Sharon – this document describes how to calculate first draw PPP loan amount by business type. See question 5 for S Corps. Keep in mind he can use 2019 or 2020 tax info at this point. (It’s similar for 2nd draw except that you have to demonstrate the 25% reduction in receipts and businesses with a NAICS code starting in 72 may get 3.5x instead of 2.5x.)

          If he spends the money properly during the covered period and gets forgiveness on that second loan then I am not aware of any additional repercussions if his business does not survive. If he does not get forgiveness then he will have to determine the best course of action and will likely want to get legal advice. There is no personal guarantee but defaulting on a federal loan may make it difficult to get other federal loans in the future. I’d encourage him to talk about this with a legal professional.

          I hope you both get the help you need to make it through this difficult time!

  41. To my understanding you have to use your Form 1040 Schedule C gross profits (and as of today you can use gross revenue) to calculate how much you are eligible for. Everywhere I read says use the 2019 Schedule C but here I’m reading we can use 2019 or 2020. Is this information correct? Thank you

    1. Roy – the SBA has clarified you can use 2019 or 2020. (They just haven’t updated all their documentation with 2020 yet.) However, the White House has announced there will be a new formula for self-employed Schedule C filers that may be more favorable. We don’t have details yet from the SBA but as soon as we do we will update this article. You may want to watch this video update in the meantime.

  42. The information is useful but for me it’s vague. Help me to understand. If I worked as a independent worker am I eligible for the loan. I was employed but as a independent worker required to submit the new W-9 form. I want to know if I am eligible for a PPP loan.

    1. Jimmy – since you are an independent contractor I assume you report your business income to the IRS on a Schedule C. If that’s the case, then you apply by using the amount on your Schedule C from either 2019 or 2020. Line 31 is your net profit and that’s used to calculate your loan amount. The calculation is in the article. That said the White House is supposed to come out with more information for the self-employed today – Feb 22, 2021 – and we will update the article when we have details.

  43. My dad is an Uber Eats driver and he qualified for PPP for the first round. He submitted his forgiveness and is running into issues. The initial application for calculating his payroll costs specifically states total gross salaries, wages, commissions. So they gave him the PPP with this method. However, with the forgiveness, they are stating it is based on line 31 of the schedule C which is the net income. Since he has many expenses as a driver he shows a loss. I would assume majority of gig economy workers (Uber drivers) have the same issue with almost no net income or even loss.

    How does this make sense that they will give you the PPP loan based on gross earnings and then forgiveness based on net earnings which means even if you show a little bit of expense you will not get it fully forgiven? I did read elsewhere the below and that for gig economy workers the amount received is just 8 weeks salary replacement.

    “The SBA has streamlined the forgiveness with a one-page application for loans under $150,000. Additionally, for loans under $150,000, you will not be required to submit documentation on your forgivable expenses. Instead, you will be asked to certify that funds were used for forgivable expenses.”

    Any input or guidance you can provide if you have dealt with this is greatly appreciated since the bank has held his forgiveness application already over 90 days because of his net loss and are stating he is not eligible based on that.

    1. Sean – I don’t remember exactly when the guidelines for self-employed (using Line 31 of Schedule C) came out but it was several weeks after PPP became law March 27, 2020. At that time it was based on Schedule C line 31. Is it possible he applied sometime in April 2020? If so then it may have gone through because the lender did not have the guidance at that time. I’m not sure what to tell your father since that guidance has been in place for some time. I’d recommend he try reaching out to his regional SBA office to see if they can help. (The 8 weeks you mention still refers to net profit in line 31 – that’s considered owner’s compensation replacement.)

      That said, the White House announced today (2/22/21) there will be changes for the self employed and independent contractors that may be favorable but we don’t have details yet.

    2. hey could you help me out, my dad is also an uber eats driver, which bank did you apply? cause all the ones we went to require a business account and he doesn’t have one.

  44. Hi I have a business that I run with my husband. Our names are on the 1040 tax return. I accidently submitted my husbands schedule C. So I corrected it by submitting my schedule C. The agent is saying that they see that my husbands owns the business and not me when in truth i am the one who owns the business. How can I fix this mess.

  45. I have filled out the paperwork for the PPP. I’m not seeing where to email it. Does anyone know the email address. Thank you in advance. Much appreciated. Lisa Price

    1. Do you mean your application? You apply through a lender. Have you already done that? If not you can apply at and we’ll match you to lending partners. If you already applied then you need to submit it to your lender.

    2. If I have a schedule C , but I have no gross profit and I’m self employed, I dont qualify for the loan? Why is this PPP loan so difficult for self employed workers?

      1. Peter – What does Line 7 on your Schedule C show? The SBA is going to be changing the formula for self-employed from Line 31 (net profit) to Line 7 (gross income). We expect new guidance sometime this week.

  46. I am self employed. I I have not done 2020 taxes yet. I know it will be more than 100k. Do I need to get my taxes done or go ahead and apply for ppp using 110k number?

    1. It is my understanding the lender will require you to submit your Schedule C to verify your loan amount. If you want to use 2020 you may use a preliminary Schedule C but the SBA advises it should be accurate. Can you fill out a preliminary one to determine the loan amount?

  47. If I have the foreign Passport can I upload that in individual proof of Identity. Eventhough I do have the state issued driving license

    1. My understanding is a US state driver’s license would be better than a foreign passport. I don’t think the latter will work. I would check with your lender though if you have questions as ultimately they will need to approve it.

  48. Hello,

    2 questions

    1. On the PPP loan i am a sole proprietor with employees and they are asking for a business license. I am a painting contractor and have provided my business certificate and HIC license. There are no other licenses for my trade, it got rejected even though the PPP doc state :Sole Proprietor • Business License

    2. Its asking for February 2015 proof of business. We had a slow week that week and I did not have payroll. I had payroll previous weeks and weeks after and I submitted all that and it got rejected. How do I go about this? I provided bank statements, payroll tax record for the month of february 2020 etc


    1. Dan,

      I am not aware of any requirement that the business have a business license. In addition, you need to establish proof that you were in business by February 15, 2020 to qualify. Providing payroll before and after that date seems reasonable to me. I am a bit baffled that your application has been rejected for those reasons. You can certainly try reaching out to your lender to see if they will work with you. Another option is to apply through Nav and we will match you to lenders that will hopefully be more flexible in their approach. I can’t promise an approval of course, but our lending partners have helped borrowers who were having trouble getting approved through a big bank.

    2. Hi Dan, this keeps happening me too. I bank with Bank of America (BOA). I’m a sole prop. BOA says I am fine and will submit to SBA for approval but then cancelled my loan and I had to start over. Now I am going through the same issue about a “business license.” There is no license to provide. I’ve provided EIN, tax returns and business statements. Have you found a solution? I’ve spent about 15 hrs on the phone with BOA to date and I don’t know what else to do.

  49. My 1099-NEC was not accepted as my income for second draw PPP. I am a field tech gig worker, is there a reason I did not get 1099 MISC?

    1. That doesn’t make sense to me unless the lender’s system’s just aren’t set up for it yet. According to the IRS, beginning with tax year 2020, use Form 1099-NEC to report nonemployee compensation.

      1. Jessica – My sense is this is an oversight on the part of SBA. I’ll see if I can get more information but I can’t imagine it should jeopardize forgiveness. (Of course I can’t speak for the SBA.) Also note the site you linked to is not the official website – it’s a private website.

  50. If I pay money to Independent contractor through my Company and I do not have w-2 employee in my company. Can I get PPP loan for my company.

    1. Not sure you will be you may. Your independent contractors won’t count as payroll but you may qualify based on your 2019 or 2020 Schedule C line 31 net profit. The formula is in this article.

  51. Gerri,

    I am a seasonal self-employed individual. I run a summer soccer camp business, and this particular business literally makes all of its money during one week out of the year. Have you seen any further guidance from lenders on how they are choosing to interpret the PPP rules regarding seasonal self-employed individuals? Obviously, I’d rather be considered seasonal than have to average one week’s (albeit a substantial sum) net over a 12-month period. Just curious as to whether or not you’ve seen any lenders lending to individuals on a seasonal calculation? The Interim Final Rule is not clear as to what is considered a seasonal business only referring to revenue and payroll costs as the defining criteria. Thanks in advance!

    1. Skylar – My experience is that lenders are pretty careful about sticking with the SBA guidance so I don’t think they would add their own interpretations. It seems to me your business would meet the definition of a seasonal business and therefore eligible to apply as a seasonal business, but I can’t find anything that spells out the calculation for self-employed businesses. (Note I don’t see seasonal business calculations listed at all in the latest guidance How to Calculate Maximum Loan Amount for First Draw Loans which I feel is an oversight. So it could be coming or they have overlooked it. There is that January/Feb calculation and it would seem there could be a similar one for seasonal businesses though I don’t think you would be able to pick a one-month period. It would seem you would have to pick a 12-week period which is not as good, but better than annual.

      Have you tried connecting with your regional SBA office to see if they can answer your question?

  52. I started my cleaning business in 2019 however my net profit was a loss for that year. I read somewhere that if I was to go by 2020 they calculate the net profit for January and February- if so for those months I show a profit bring a sole proprietor with no employees. Confusing part is in May I changed over to an LLC and hired employees in June so had payroll from June-December. When filling out the application do I fill it out with no employees or with?

    1. You can use 2019 or 2020 annual. The guidance states: However, borrowers are permitted to use payroll costs from either calendar year 2019 or calendar year 2020 for their First Draw PPP Loan amount calculation. The January/February calculation you refer to is for businesses that were in operation on February 15, 2020, but not in operation between February 15, 2019, and June 30, 2019.

      The short answer is I don’t know. You’re going to have to talk with the lender to see what they recommend. My concern is whether the LLC you started in May 2020 would be seen as a new business. Did you have the same EIN and business name or did you create an entirely new business with your LLC? If it treated as the same business then you could choose the annual period that offers the higher loan amount for your business. Again this is a scenario where I think you’ll need to get some professional advice. Talk to your accountant first. If they can’t help, your Small Business Development Center or SCORE may be able to assist. Find your local resources here.

      1. I am an Uber Eats driver and qualified for PPP for the first round even though I showed a loss on my 2019 Schedule C. I submitted the forgiveness and I am running into issues. The initial application for calculating the payroll costs specifically states total gross salaries, wages, commissions. So they gave the PPP with this method. However, with the forgiveness, they are stating it is based on line 31 of the schedule C which is the net income. Since I have many expenses as a driver I show a loss. I would assume majority of gig economy workers (Uber drivers) have the same issue with almost no net income or even loss.

        How does this make sense that they will give you the PPP loan based on gross earnings and then forgiveness based on net earnings which means even if you show a little bit of expense you will not get it fully forgiven? I did read elsewhere the below and that for gig economy workers the amount received is just 8 weeks salary replacement.

        “The SBA has streamlined the forgiveness with a one-page application for loans under $150,000. Additionally, for loans under $150,000, you will not be required to submit documentation on your forgivable expenses. Instead, you will be asked to certify that funds were used for forgivable expenses.”

        Any input or guidance you can provide if you have dealt with this is greatly appreciated since the bank has held my forgiveness application already over 90 days because of the net loss and are stating I am not eligible based on that even though they gave me the PPP loan in the first place.

  53. I am a I sole proprietor tax preparer with no employees. We are seasonal making most of our money feb to April. How do I calculate my loan amount as my schedule c is for 12 months? But as seasonal should not I be able to use an 8 week period?

  54. I have just applied for my first PPP and was told I am not a candidate because I don’t have a business account. I have had for 15 years two separate accounts at Citizens Bank, one for the office and one for personal. They tell me I had to apply for a business account by 12/1/20 before we had PPP2 I’ve had a small massage therapy business specializing in senior clientele. With Covid, they are smart to remain home for now. Is there any company financing those of us with valid small businesses but no ‘business account? Thank you

    1. I’m sorry the way the comments dashboard works I can’t see what you’re responding to. All the guidance mentions 1099-MISC but I don’t see where it should be a difference since 1099 NEC since it reports independent contractor income.

  55. My gross receipts total for 2020 Q2 was less than 75% of 2019 Q2, so I qualify for a second PPP draw. But for the year, my total net profit for 2020 was actually more than 2019 (although I obviously haven’t prepared or filed my Schedule C for 2020 yet). The loan amount is based on net profit for 2019 or 2020, whichever is greater.

    It just seems bizarre that my net profit was HIGHER in 2020 than in 2019, yet I qualify for a second PPP draw because of ONE bad quarter. Do I really qualify? And should I really use my 2020 net profit to calculate the loan amount, even though it was higher than 2019 (which was the basis for my first draw)?

    1. That’s the way it is set up. I think Congress recognized different businesses were affected at different times. You are given the option of 2019 or 2020 so you may choose the one that works best for you.

  56. I started contractor work in June 2019 and showed a profit in Schedule C. My service in 2019 was “as requested” so my 1099 only reflected 4 months of billing (June – September), I did have full year of contractor work in 2020. So when I apply for PPP based on my 2019 Schedule C, can I arrive at monthly payroll figure by dividing Schedule C profit by 4 (actual months of income), or by 7 (from June – December), or does it have to be 12? I didn’t have full year of operations in 2019 so divide it by 12 seems incorrect.

    1. Jessica – Did you show a profit in 2020? If so, why not apply based on 2020 net profit?

      I haven’t seen any guidance that specifically allows an independent contractor to apply based on prorated months in business. (There is a seasonal business calculation but since your business is not seasonal it doesn’t seem that would apply.)

      1. Thanks for your response Gerri. The reason I don’t want to use 2020 profit is my 1099 won’t arrive until early February 2021 and my 2020 tax return with schedule C won’t be completed until end of March. That would cut it too close to end of the PPP deadline. I read somewhere that applicants can use January and February 2020 info to populate a tentative schedule C and calculate average monthly payroll. Does that sound right?

        1. I haven’t seen that Jessica but there’s a lot of guidance that came out recently. I recognize this is going to be a problem for many business owners who want to use 2020 information.

          This is the latest guidance from the SBA on how to calculate and document loan amounts. Although it’s for second draw loans, calculating maximum loan amount works similarly for first and second draw loans except for the 3.5 for 72 NAICS code. (Unfortunately the way these comments appear I can’t see your previous question so I can’t remember if you were applying for a first or second draw loan.)

          If you use an accounting software program to log your income and expenses during the year then your 1099s can just verify that your income information is correct and you should be able to produce a tentative Schedule C. That’s one reason I’ve been strongly recommending business owners keep their books up to date during the year and not wait until tax time, though I understand that’s not how many work that way. I wish I had an easy solution for you! Have you talked to your accountant for advice on this?

    2. I worked with Doordash and Postmates in 2019 and 2020. I’m on my parent tax return since I’m still in college. Can I apply as self employed? If you weren’t required to file a tax return due to your income thresholds it may be possible to still complete and file a return but depending on the amount it may or may not be worth it.

        1. Can i qualify for a ppp loan to get my business started up the correct way because I’ve been had my own business for about three years but I don’t have the license.

  57. I am a independent insurance agent and I use my personal bank account for my business bank account as well. I started my application but it had a question/statement that asked that my business account did not include personal use which mine does. Will this prevent me from applying for a PPO loan? This is my first time applying.

    1. Cathy – Some lenders are requiring a business bank account for PPP. It’s something we’ve recommended from the first round and generally a good practice. If you are using bank statements to verify the drop in gross receipts (for second draw PPP) or for other verification a bank account that mixes business and personal expenses will be problematic.

  58. I am a sole proprietor of a small business. I own a salon and have no employees. I had a loss in 2019 on my schedule C and did not show a profit. I will show a small profit in 2020 on line 31 of my schedule C. I am in California and my salon was closed the majority of the year due to state mandated closures. I understand I can file as a seasonal business because of this. If reference income between the dates of February 15 of 2019 to February 15 of 2020 and pick my best 12 consecutive weeks they would have been in 2019. If I submit my 2019 tax return it will show a loss and I am afraid I will not be eligible even though my 2020 schedule C will show a profit. Can I submit my 2020 tax return showing a profit for 2020 online 31 of my schedule C but use a 12 week time period as a seasonal business in 2019 as the reference for my 12 week period for my seasonal business income?

    1. Melinda – Is this your first PPP loan? If so then you do not have to show the 25% reduction in receipts. You can apply based on your 2020 Schedule C net profit. The 25% reduction is only for second draw loans and based on the fact that you showed a loss last year I assume you didn’t get one previously.

  59. Hi Gerri!

    Quick question, if a multi-member partnership that was established back in 2019, had experienced a net loss for that year due to a large capital investment, how would they apply for a PPP loan? It’s confusing since schedule k for the partners show a loss for their 2019 return, do they automatically not qualify for the PPP loan or can the year of pandemic be used for the new application? Note that they had not applied last year , and it’s their first time applying for PPP.

  60. Hi there!
    I own a small consulting business with no employees. My primary client has lost funding over the last year and cannot pay me for the time being. They want to keep me on, but don’t know when their funding will be restored (if it will). Can I get a PPP loan to cover the %lost income? I won’t have $0 coming in, but I cannot cover my expenses. I’m looking, but there isn’t a ton of work in my area at the moment.


  61. Len
    Hello I own a building with 3 Apartments. Was not able to collect any rent for 2020 but paid all property bills. Would the EIDL be available to me?

  62. If you are self employed with an 1099, but you also have outside contractors with 1099 as well so how would you go about applying for the PPP if you didn’t apply for it last time? Need clairfication please?

    1. You cannot include any payments you make to 1099 contractors as payroll. They are not employees – they are contractors and can apply on their own.So if you don’t have any employees then apply using the instructions in this article for self employed no employees. As a first-time applicant you don’t have to demonstrate the reductions in gross receipts. You may apply based on 2019 or 2020 net profit Schedule C.

      1. Gerri I’m young I dropped out of 6th grade for reason that are difficult to explain, but my question is I worked doing house keeping I had a ad oN craigslist while back then I started help out the elderly I owe child support so I accepted mostly cash or visa gift cards BECAUSE THEY STARTED TAKING ALL MY MONEY OUT BANK A LEIN, I have no proof what they are asking for.. if you know how I can prove that I own my own side hussles business. SHOULD I PRINT A FORM OUT OR MAKE A SPREAD SHEET, WHAT PAPER WORK WOULD I NEED… I PRY SOMEONE CAN HELP ME I JIST LEARNED THAT WHEN U WORK KEEP PROFF BUT.LIKE I SAID I DIDNT HAVE ANYONE WHO COULD TEACH ME HOW TO BE SUCCESSFUL BUT I LEARN QUICK THANKS.

        1. I’m sorry you’re having difficulty applying for PPP Janet. The SBA requires proof of payroll. A tax return with a Schedule C from 2020 can work but you’ll need report your income to the IRS on a Schedule C tax form (or at least received 1099s from those you worked for). If your income is all “under the table” or not reported to the IRS for taxes, as it sounds like yours is, I don’t believe you’ll be able to qualify for one of these relief loans. If you need more direct help with your business and available programs I suggest you contact your local SCORE or Small Business Development Center. They offer free mentors and many are providing help with these covid relief loans. You can find your local office here.

  63. I was a sole prop in 2019 and 2020, just changed my entity to LLC and filed for a new EIN. For round 2, do I use the old EIN or new?

    1. That’s a good question Katrina. I assume you have to use the current one but I would not be surprised if there are some hiccups because you have the new EIN. You may need to discuss with the lender.

  64. Your article states that for a self employed person with no employees, his IRS Form 1040 Schedule C line 31 must show a net profit amount to qualify for a PPP loan. But if he does have employees, and his Form 1040 Schedule C line 31 is less than zero, then it should be set at zero. Am I correct then that a small business with an employee will qualify for a PPP loan even if the business has a net loss for the applicable year? Thanks

    1. My understanding is they may qualify based on payroll for the employee even if the business showed a loss. The Schedule C net profit is a proxy for payroll for businesses with no employees (since they often don’t pay formal payroll). At least that’s my understanding!

  65. My job as a hospital nurse got eliminated last year due to covid after 20+ years. I started a home health agency July 24th but it took until now to get my license so I can hire & take on clients. Will I qualify for a PPP loan using a projected payroll since I do not have previous payroll info.

  66. My father has an llc for two commercial restaurant properties. He has not received rent from tenants since February due to pandemic even though tenants have received their PpP and other benefits. He is retired ans his income was baed on net profit from monthly rentals.. Since he does not pay myself via pyroll, he was denied the first ppp rouns application. Does he qualify this time around for PPP?

    1. PPP is based on payroll – both before and with the new round. Did he know that he may qualify based on Schedule C net profits?
      Also maybe he will be a better candidate for an EIDL loan or for the rental assistance in the stimulus bill. (I have not researched the latter.)

  67. Hi,
    I am a uber delivery driver. I reported my earnings for 2019. Am I qualified for the PPP loan? if yes, Where can I file to?

  68. Hello I’m a new LLC business with myself as the only employee that started in the beginning of 2020 and because of covid I had to put my business on hold how do I apply for a loan to help with start up funds.

  69. i am license holder for esthetician and i was self employed now i am not doing anything because of covid and i have no prof
    it there any possible to get ppp?

  70. im self employed im out of workn
    due to this covid 19 shit i have 3 children to support nothing is working for me i dont understand all this stuff it seems like i cant get help in any kind of way i havent gotten a stimulus check and barley got approved for snap bennifits this is so ridicklous im so depressed i dont know what to do anymore i cant get help from anything and my bills are steadly rolling in

  71. I am a self employed farmer I do not file a schedule C but file a schedule F. Will that work by using line 34?

  72. “if you have maximized expenses to the point where your business only shows a loss, you are likely not going to be able to qualify for the PPP loan”
    This is my situation what would be my next step or what would be the best option for me?

  73. Hi. I am self employed and I already filed my 2019 taxes but not schedule C.
    Can I still apply for PPP loan?

      1. I made around $27,000 from September to December and my Schedule C net profit was $315. And I got approved for $66 dollar PPP. Not sure why my net profit was only 315. I need an explanation. Thanks

      2. I am Self Employed and have a corporation, and a 2019 corporate tax return. I have a K1 return not schedule C. Can I still qualify for PPP? So many online applications do not allow for this.

          1. Can’t find any documentation on how too file for PPP if I’m a s corp no employees and file 1120s. K1 from

          2. Jay – The SBA describes how to calculate payroll for S Corps in this document (page 4). Note it appears they are assuming that the employees (including yourself) pay yourself a salary and do not take your entire compensation in the form of distributions which are not subject to payroll taxes. The IRS requires this. If you are paying yourself entirely through owner’s draw I haven’t seen anything that would indicate how you would qualify. We wrote about this in 2020 in this article.

  74. I am sole proprietor and had 1 employee when I applied for ppp funds and I now hired 1 full time and 1 part time employee. How do I use the money in 8 weeks and can I use any of money to compensate myself?

  75. Hi,
    I took over a business in beginning of December of 2019 as a sole proprietor so my schedule c only show for 1 months of income of $6,522. Is this mean I will get a loan of $16,305 cause $6,52×2.5=$16,305 or how they will calculate?

    1. Currently that’s the guidance we have yes. There was mention in one of the Interim Final rules about releasing guidance for newer businesses but I haven’t seen that yet.

      1. Hello I started my business as a Tax Preparer I am the only employee I had my fees going into my PayPal account can that be used as my business bank account

      2. Hi,

        I started driving for Uber as an independent contractor in January 2020. Therefore, I have no business income for 2019 to file. I do have paperwork from Uber showing my monthly income from January until now. Can I still apply for a loan? If so, which loan?

  76. I’m a self-employed working as a taxicab driver but unfortunately because of inconsistencies in ridership, I incurred a loss in my business in 2019.

    I’m now in limbo for being ineligible for PPP loans that would keep my business afloat and put me in a right track as the process of reopening businesses is currently under way following their lockdowns caused by the Covid-19 pandemic.

    I’m wondering how I would get help to keep my business alive.

  77. I am self-employed and received funds from EIDL. However only $1,000 in advance is forgiven. I would like to apply for PPP (may be too late, but worth a try) to convert the EIDL loan to PPP. But I don’t know which lender to apply with. I am located in southern California. Bank of America requires to have a business account which I don’t. I only have personal account but do receive 1099 Misc. Thank you.

  78. I read the article for Self Employed qualifying for the PPP loan and am still unclear if I qualify. I am a Statutory Employee of a well known Fortune 100 Life Insurance Company. As such, I file a Schedule C reporting my income and expenses. Do I qualify?

    1. Unemployment does not stop you for applying from PPP. But if you get PPP and use it to pay yourself you’ll likely need to report those earnings during the applicable weeks to unemployment. Check with your state unemployment office.

  79. hello,
    Thank you so much for providing this info. I am a single member LLC owner. I applied in the first round of the PPP. During that time there was NOT a section for me to put my schedule C line 31. I was only given money for my 3 employees. I then applied for unemployment and just received a notice that will be getting money. However, I am so confused because I just read an article that you cannot get unemployment if you receive the PPP. But my PPP didn’t include any money for which I can pay myself! I’ve already received the PPP and money will be in my account any day for unemployment. Should I try to cancel the PPP loan I received from my bank and try to reapply to another bank to be able to include my self? I have some income still coming in but not enough to cover my bills and pay myself. Will that effect if I try to keep unemployement or will I just have to gove th unemployment back anyway because I got the PPP!

  80. I am self-employed. I have filled out the PPP form and have a 1099 and Schedule C.
    How do I submit myself since so many of the certified lenders are not handling the applications anymore?
    Please advise. Thanks.

    1. More lenders are accepting PPP applications from the self employed but the deadline at the moment is June 30, 2020 to get an approval number from the SBA. As a result some are stopping applications to ensure they meet that deadline.

  81. Am I understanding correctly that the EIDL fund is only loaning out 10,000 ???? What are small businesses suppose to do with that. Will the SBA consider loaning more money? I need a much larger loan than that. I’m self employed and in the Tent Rental Business Do Weddings mostly. Being that there are no groups more than 5 people their are no parties or weddings. Nothing. I cant afford this. I’m only one and half years in business. If I don’t get a loan real quick, I’m going to have to close.

  82. I’m the only employee under my Corp. To-date my earnings have not been impacted by COVID-19.

    I just want make sure- based on the PPP loan guidelines I am eligible to spend the PPP funds, correct?

  83. Question about “impacted” meaning.. I am an independent contractor (LLC), applied, was approved and recvd the loan. Was in a contract that ended naturally 3/31/20. I did get another contract (4/1) but a short term contract (6mo). With the slowdown I was very concerned as to what might happen with the contract and/or that I may not get another anytime soon—-basically very uncertain since things were changing almost daily. Still in the contract thankfully but wondering if this would cause an issue or appear as though I did not need to loan? The total amounts to a couple thousand more than 2 months of my payroll (which is only myself), so it’ll meet the 75% payroll requirement. Just wanted to know if there’s scrutiny for being in a contract (which can be cancelled at any time even during normal circumstances). Any idea?

    1. Laraine, guidance from the Treasury and SBA updated May 13, 2020 states: . Question: How will SBA review borrowers’ required good-faith certification concerning the necessity of their loan request?
      Answer: When submitting a PPP application, all borrowers must certify in good faith that “[c]urrent economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.” SBA, in consultation with the Department of the Treasury, has determined that the following safe harbor will apply to SBA’s review of PPP loans with respect to this issue: Any borrower that, together with its affiliates, received PPP loans with an original principal amount of less than $2 million will be deemed to have made the required certification concerning the necessity of the loan request in good faith.

  84. Hi. I am an owner operator for a trucking company. I do have my corporation and i run my payroll. Am i qualify for the PPP. I do not have no employees and i am the only one in the company. And i do not have no other expenses no rent no utility nothing. Can you advise please. Thank you

  85. We received a PPP loan intend to use 75% or more on payroll costs, any guidance on how the SBA will review my balance sheet before after the 8 week period and determine my true need for the loan and whether my forgiveness was justified.

  86. I’m a independent contractor that started my business at the beginning of the year but was in operation before 2/14/20. How do I go about filling for the ppp loan? I do not have employees

    1. Lee – the SBA and Treasury have not yet released guidance for your situation. The best we can recommend is to contact your Senators or Representative in Washington DC to explain that you need this guidance in order to apply.

  87. I have a question about having more than 1 Schedule C for the PPP & EIDC applications. On my 2019 taxes, I filed 2 forms of income as self-employed (sole proprietor). 1st was a 1099-MISC from a company a work for as an Independent contractor. 2nd for my graphic design company. I filed a Schedule C for both, which do I use for my gross revenue and expenses for on the applications? Or do I combine both?

    1. Heather, I don’t think I’m qualified to accurately answer this question. You should consult with your tax advisor to get the answer to this question.

  88. I am a 1099 independent contractor , and I have always run my business through my personal checking account since 2004. My business expenses are low (generally below $5k/yr), and the IRS and my CPA have never had a problem with me using my personal checking account for business expenses. I applied for the PPP loan on Tuesday morning (5/5/2020), and received the wire of funds to my personal checking account the next day (5/6/2020). I only plan on using the PPP funds on payroll. For documentation, I plan to write myself a check from myself a pay check on May 15 of half the PPP funds. The pay check will be deposited straight back in to the same personal checking account. I plan to write myself another pay check on June 15 with the remainder of the PPP funds. Will keeping the cleared checks written as paychecks be sufficient documentation for forgiveness?

  89. I am a sole proprietor. I have no employees. I have received my full PPP loan request. Since I have no payroll do I have to follow the 75% rule which seems to be very prominent or do I only pay maybe self the calculated amount after I take my net from my 2019 schedule c and multiple by 8/52. When I do that calculation it does not equal 75% of my loan.

    Just curious what you think

  90. I operate as an independent contractor in the real estate services industry. When the PPP application process was opened to independent contractors on April 10th, the documents required at that time only included the 2019 1099-MISC form to show total wages/commissions earned. It wasn’t until the following week, April 14th, when the Form 1040 Schedule-C became a requirement. I submitted my application on the 10th and was approved the following day, the 11th, prior to the SBA Interim Final Rule. My loan was closed and funded without the additional documentation being required. While the total loan amount that I am/was eligible for would not have changed based on the difference between my 1099 and Schedule C amounts, I wanted to ask if my loan is still “good” and “acceptable” without ever having to submit the Schedule C, or will I need to submit this when it comes time to ask for forgiveness?

  91. I applied for PPP, was approved and got my funds. The question I have is, the lender approved me 4307 which is less than what I my business qualified for. My net gain for 2019 was 28017, so can I use all of 4307 on self employer profit payment, splitting it up over an 8 weeks, or do I have to use 75% towards paying myself and 25% towards rent? Also can I use the fund in less than 8 weeks or do I have to spread it out equally over 8 weeks?

    1. Alison – The calculation for PPP forgiveness for the self employed is in this document: Interim Final Rule. Look at page 4. It appears, at least from this guidance, they are just requiring the Schedule C from 2019 if you don’t have employees or payroll records.

  92. I would like to add to all the thank you’s for this helpful article and comments. I am in the same boat as Ryan, who posted yesterday that he received a $1,000 EIDL that was applied for a long time ago and came through the day after the PPP loan was funded. I’ve read elsewhere that having funds from both is acceptable if they are used for different things, i.e. the PPP money is replacing my net profit from Schedule C for 8 weeks, but the EIDL money is used to pay my home office mortgage/utilities expenses for some number of months. Perhaps that distinction only applies to EIDL loan funds beyond the grant? Or if I can document that I used (some of) the EIDL grant to pay for non-payroll expenses, does that keep (some of) it from being deducted from the PPP forgiveness amount? If so, how many months’ worth of those expenses are allowable? The same 2 months as PPP? The rest of 2020? I understand if no one has the answers to such specific situations yet, but I thought it couldn’t hurt to ask. Thank you!

    1. Hi Erik – I have been on numerous webinars with SBA personnel and SBDC advisors where they state it is fine to apply for both and that funds can be used for different purposes. It appears to be the case that business owners will have to subtract the EIDL advance (grant) from PPP for forgiveness purposes. So you may get $1000 less forgiven from PPP, but other than that it appears you just have to use each for acceptable purposes which we did our best to describe this article:
      FAQs about applying for EIDL and this article:

    2. Hi
      Im a business owner with one employee. I applied to both EIDL and PPPL loans.
      I got 1, 000 and my banknote said SB Treasury on April 20 is that EIDL? Was that just an advance or was that the EIDL loan that they are giving me?
      My PPP loan, that was approved last week and I did the Application on April 8. So, I couldn’t ask for that to be forgiven. What will happen?
      When my bank gave me that laughable amount of a loan, I started to question why my line 31 income wasn’t added. She just said I can only ask for payroll amount. X that by 2.50 Is That true?
      I have a friend with a business and asked for the amount she wanted and got it. She said the payroll didn’t come up to the amount she asked for but the bank gave it to her on top of another 30,000 she asked for, she got three times more then what she paid for payroll to her employees while I got exactly 2.50 x whatever my part-time employee payroll is. Nothing less and nothing more.
      Did my bank do my application wrong Or they just give me what they think could be forgiven?
      I just don’t understand? Could it be that she asked for extra money and the bank approved that and whatever she uses will be forgiven, only if she use it on employees, rents, utilities, and etc that could be forgiven? She thinks otherwise. She said, they will forgive all the money she asked for.
      Im so lost and confuse with everything and no one can help me answer these questions.
      I don’t even know if there’s anything else I can do anyways, now that the funds are in my bank. I feel that there isn’t much help for us. Why didn’t SBA made it clear to banks to inform us that, we could ask for extra money and on top of it all we can in turn ask SBA for most of the loans to be forgiven, if used on employee and etc. thats listed.
      My bank said nothing like that to me. They just said, I can only apply for the amount to be forgiven.
      What are your thoughts on my questions and concerns?
      Thank you
      I hope you can give me an answer that no one seems to know.

      1. The $1000 from SBA may have been your grant if you are the only employee. It does appear they are just depositing those funds without any additional information.

        For PPP if you file as self employed with employees then there is a very specific calculation for your loan amount. Did you apply a while back? If so it may have been before that guidance came out. At any rate you can read it in the Treasury guidance on how to calculate PPP amounts by business type. You may need to share that with your lender if you believe they are not calculating your loan amount correctly.

  93. Thanks for the article. When I applied on 4/10 I wasn’t told to specifically use, from my Schedule C, Line item #31 – which would have been helpful. I gave line item # 7 gross income. Thinking that my expense’s that would be covered under the PPP are paid from gross sale and are used as deductions not from my net profit. Anyway, I am self-employed -1099, no employees with a LLC since I have no employees am I able to just use all the funds for payroll, to keep it simple? I am well below the $100,000 annualized, so I’m hoping to keep it simple and have the loan be forgiven. Thoughts?

    1. Jack – You’ll apply for forgiveness in the future with the lender and they’ll require you to submit acceptable documentation. Keep in mind everyone is currently waiting for further guidance about forgiveness from the SBA and Treasury.

      It appears they are limiting forgiveness for Schedule C filers to 8/52 of net profit – plus (not clear) certain qualified expenses. Details can be found in the SBA supplement to the Interim Final Rule (self-employed). You may want to review it and talk with your lender about returning any excess funds. There is no prepayment penalty if you repay early.

      1. Thanks – scary to think that they are giving out loans but all the information in not clear. I just got my documents today to sign. Only had small window and couldn’t call U.S. Bank as they only want email correspondence. Hope for the best and plan for the worst I guess.

  94. I got the PPP money (5/1)once the second round opened, but applied for EIDL in round one but did not get funds or they ran out. I got just got the EIDL 5/4 today 1K and not sure what to do honestly. I am a sole member so it is just me and do not want to mess it up.

  95. I am going to receive a small PPP loan. I am a 1099 independent worker. I work from home and don’t really have many expenses. When I applied for the loan I provided my 1099 from 2019, plus I added by health insurance information. My question is what documentation will I need to submit so my loan will be forgiven, besides my 1099 from 2019?

    Thank you.

  96. I am self employed with NO employees.
    It’s just me. Do I say that I have 1 employee or 0 employees? There is NO clear answer in ALL articles I’ve researched. So frustrating not finding the answer.. HELP. Can anyone answer this question with certainty?

  97. Do I qualify if I just started my business this year and had to shut down due to Covid-19?

    1. Loretta – If you started your business by February 15, 2020 you are technically eligible but if you file Schedule C to report your business income the IRS hasn’t released any guidance for determining how much you qualify. The best I can advise is to contact your elected officials in DC for help as this is a federal program.

  98. I am self employed; no employees otherwise. I submitted my application along with my 2018 schedule C. Have not filed 2019 yet. I realize now that I estimated my monthly earnings based on gross profits.
    Since they approved my loan and provided a fixed amount, am I to believe they reviewed the application and determined the loan amount regardless of my mistake? Your thoughts; recommendations? Thanks!

    1. Rick – I don’t know. The best I can say is to contact the lender. You should try to get your 2019 taxes done as soon as possible though as your 2019 Schedule C line 31 is the amount you are supposed to use to qualify and it can affect your loan forgiveness eligibility.

  99. I am self employed and have a Net Income from Sch C of 95,000
    In addition I have Payroll of 5.000
    and Group Health Insurance of around 24,000
    I went through bank of America and just got approved for $1000
    The SBA decided to only use my payroll and completely ignored my Net Income and Group Health Insurance
    Total Scam

  100. Wow, what a shame, disqualified if you were in the negatives, even though I can show I was only in the negatives because of paying off the business in less than year. Well guess it was a good 10 months while it lasted.

  101. I’m a self-employed Uber and lyft driver. I’m getting unemployment. Can I also apply for PPP loan? Since it’s a loan. Will there be any issues? I looked all over and can’t find anything that says we can’t get both.

  102. I started a new business (sole proprietor) Jan 2020. It is a profitable business with long term agreements with my customers. I have no tax documentation for the business. I have no employees, beside myself. My payroll is essentially the deposits into my checking account. I have applied already but was told I was too late for the first round. I got a response when I applied for the second round that I was basically declined with no conversation with anyone that I could discuss my situation with.

    Do I have any options?

    1. Marlon,

      The SBA has not issued guidance about how to calculate PPP eligibility for those who are self employed, file Schedule C and started their business in 2020. I’d imagine lenders just don’t know how to process that given the SBA hasn’t issued any guidance. I’d suggest you reach out to your elected officials in Washington and let them know the problem you’re experiencing trying to apply, as this is a federal program.

  103. I am an independent insurance broker who gets paid 1099’s under my social security number. Am I able to apply for the loan? If yes how to I prove that I used it toward payroll?

  104. I just applied over weekend fir second round and 1st round said qualify second the lending companies say if don’t make 8000 a month an independent contractor doesn’t qualify. This is garbage big business is getting money left and right. This is fir us the small people that are the backbone of our community.

    1. Shel – Did you try another lender? Some are taking self-employed applications for lower amounts. Fill out the form at to be matched to a lender. No guarantees but it’s worth a try!

  105. I did the entire application process, and then toward the end, it asks for payroll documents, which i do not normally use since I am self employed. I don’t use any payroll service. I did the calculation just as it shows above. The amounts were substantial. the only thing I was missing was some kind of IRS documents that had to do with estimated payments for taxes, which I did not ever use. I have not filed my 2019 taxes yet, but I even supplied my bank statements, etc… and I basically was told if I could not supply those documents I was just S.O.L.

    I am so frustrated and frankly -very angry -that i am being cheated out of nearly 20K. I am certainly very qualified.

    What is your recommendation. The rep that replied to me basically told me – THAT’s fine I will just withdraw your app. He showed ZERO interest in helping me get anything done.

    1. Nathan, according to the SBA you will need the documents outlined within this article in order to submit an application as someone who is self-employed. Otherwise, your lender will have no way to help you determine your loan amount. It’s not necessary that that you have filed your taxes to apply, but you will likely need to have them put together. If you file a 1040-C, you will qualify based upon the profits reflected there.

    2. Nathan, I’m sorry to hear of your experience with your lender. We know a number of borrowers who applied as self employed. Have you applied elsewhere? We’ve been recommending borrowers apply with multiple lenders to see who is able to help them first.

      1. I received approval for ppp loan, but I only applied for the amount to cover my employees’ paychecks. Can I apply for a separate ppp loan for myself as a sole proprietor who files 1040 schedule C? I know you can only use tax ID once, can I use my SSN to apply? Thank you!

  106. My line 31 schedule C is not completely accurate since I started my company in July, 2019, It is only 1/2 the year….do I just divide by 6 instead if 12 to determine the monthly rate?

  107. Thanks so much for the article. It was very informative. I am self employed and took a loss on my 2019 taxes so it’s saying I’m not able to apply. This virus is affecting my business as things are slowing down tremendously. Why can’t self employed people apply if they took a loss?

  108. Hello and thanks so much for the guidance and webinars! I was hoping to apply for a PPP, but am discouraged by your statement above that if my business and personal expenses are co-mingled, then I’m not a good candidate.

    I can clearly demonstrate my income with the 2019 Schedule C, but as a freelance writer/illustrator working from home, all my income goes straight into a joint checking account [shared with my husband,] and is used for household expenses. I do not pay myself a ‘salary,’ but my income is necessary to paying our bills.

    Is it worth my effort to apply??

  109. 941 & 940 have 2019 but in 2020 I don’t start payroll . I withdrawal each partner from llc wholesale home base business. How can show 2020 . Already applied ppp and sba need 2020 busines 941 1st quarter.

  110. When filing for sole proprietor do we count our self as 1 employee or do we put 0 in the box for number of employees? I AM THE ONLY ONE WORKING IN MY BUSINESS. Do I say 1 for me or 0. Anyone? Bueller, Bueller, Bueller

    1. If you are the only employee in your business then I would assume you have 1 employee. I don’t know which lender you’re applying with – have you been able to ask them?

  111. I was babysitting in my home and was getting paid cash can I apply for the loan and would I qualify for the loan?

  112. I own rental property and have 8 k-1’s on my return. My gross adjusted income is 85k. Do I use this number to apply? The application is confusing because they ask for a company name not a personal name. Can you assist me? I’m kind of confused

    1. Susan, PPP qualification is based on payroll. I haven’t seen any guidance specific to owners of rental properties but an email from the SBA dated April 6, 2020 states, “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.” That’s not official guidance from the SBA Administrator though. I’d recommend you talk to a tax professional familiar with these programs.

  113. Hello Gerri ~

    I believe that, as of today, 2020-04-22, there is something on the SBA’s PPP application that is misleading at best, and at worst, will be causing eligible people to conclude they are not, or be incorrectly rejected.

    There is a section called CERTIFICATIONS, where the applicant must initial their agreement to about eight different statements, including this (CAPITALIZATION is mine):
    “_____ The Applicant was in operation on February 15, 2020 and HAD EMPLOYEES for whom it paid salaries and payroll taxes OR PAID INDEPENDENT CONTRACTORS, as reported on Form(s) 1099-MISC.”

    Is this correct? I have sent this question to many, and received one substantive reply, from an accountant. She agrees it is flawed, for multiple reasons:
    1) The requirement of having employees is supposed to only apply to corporations.
    2) With #1 not clarified, how many sole proprietors with no (other) employees will conclude they are indeed their OWN EMPLOYEE, which you are required to affirm to qualify — and how many pay themselves a salary?
    3) The whole part that starts with “OR…” is no longer in effect.

    I have sent this to many folks, and I’m surprised more people aren’t outraged. There are desperate people looking for help, and this erroneous info is on the OFFICIAL APPLICATION from SBA. This could easily cause qualified folks to not submit the app, or submit with an answer that causes immediate, incorrect rejection.


    1. Doug – You are not alone in noting these discrepancies. That language came from the CARES Act itself. The SBA guidance subsequently said that you cannot include 1099 contractors in your payroll (unless of course you are a contractor applying for yourself.)

      It’s not the only discrepancy. For example, the CARES Act stated that you use the most recent 12 months of payroll, then the application said 2019 payroll, then the SBA came out and said you can use either…

      Let your elected officials in Washington know!

    2. Doug,
      I totally agree with you!! I have just submitted my concerns on here too.
      I have asked questions after question and I get The minimum, while all these big companies and people asking extra money and getting it!! This is all wrong and nobody knows what they are doing!!

  114. I own a small salon that has other self employed people that pay me to rent a chair. I am currently collecting unemployment for what I pay myself. Can I still apply for help With the rent of the building and utilities (for the salon)?

    1. PPP is primarily for payroll so it gets tricky. It appears you need to limit those costs to 25% of your loan for forgiveness purposes. I’d suggest talking to a tax professional if you want to go that route. Have you applied for EIDL? It may be a better fit for what you need. (Congress needs to authorize more funds for both programs but that will hopefully happen this week.)

  115. My Schedule “C” Line 31 shows a loss due to some equipment purchases I made and took the Sec 179 deduction. Am I out of luck for PPP or is there some provision to allow adding depreciation back into the net profit calculation? Thanks.

  116. Since Congress passed the PPP does that include The SBA disaster loan and advance too. Thank you.

  117. I own 2 separate businesses. Both are Sub S Corps. I do not take a salary but report income at the end of the tax year. I can’t qualify for the PPP for the corporations so what can I do? Also the 2019 taxes for both will not be done until September. Thank you.

  118. My bookkeeper has not yet done our 2019 taxes yet, due to illness. Can I use my 2018 retutn? I am a small florist trying to do everything myself and am quickly losing my 30 year old business and need immediate help. It is the sole support of my family. What can I do,? It’s all too confusing with so many options.

    1. The SBA is specific in its recent guidance that you must use Line 31 from your 2019 Schedule C. You don’t have to file it your 2019 return but you must complete it. I’m so sorry – can you find someone else to help you? Use an online accounting program? Round 2 of PPP (if funding is approved by Congress) could go quickly as well. Alternatively have you looked into Pandemic Unemployment Assistance? That may be an alternative though the amount for which you may be eligible may be different.

  119. Are applications here with Nav still valid even if funds are currently unavailable? I mean, if funds become available again, will our application here be submitted for funding?

    1. Yes Nav will continue to match borrowers to lenders while waiting for Congress to authorize more funding. Be sure to check your email as you may have been matched to a partner. If you’re not sure, reach out to our Customer Service department.

  120. As I read through this I didn’t see if when filing for sole proprietor if we count our self as 1 employee or if we put 0 in the box for number of employees. I am the only one working in my business. Do I say 1 for me or 0?

    1. I agree with Melanie. The Q and A are not clear. I too don’t understand if I am considered 1 as an employee or if because it’s just me in my little business I’m employee 0.

      It’s also still unclear on how to calculate these funds being used for payroll. I AM the payroll. It’s just me. Reading over this just gets me frustrated.. Anyone know that answer to Melanie’s question

      As I read through this I didn’t see if when filing for sole proprietor if we count our self as 1 employee or if we put 0 in the box for number of employees. I am the only one working in my business. Do I say 1 for me or 0?

      1. Victoria, I’m sorry it’s confusing. You are the only employee in your business correct? Then it’s 1. And you file Schedule C? Then according to the SBA SBA supplement to the Interim Final Rule you use the net profit from your business line Schedule C line 31 to calculate the loan amount. See page 6 of that document I just linked to. Unfortunately I don’t know what lender’s application you’re trying to complete so I am not sure what exactly they are asking.

  121. Thank you for posting this helpful info. My bank’s PPP application required proof of payroll (the purpose of my application is to recover some of my income – not for mortgage or utilities) , but I don’t have a payroll. I am a sole proprietor – I own a photo studio in NYC, and it’s just me – I have no employees. As such, I have never kept an official payroll. Am I legally required to have been doing so, and will this prevent me from receiving funds?

      1. Hello. I am a barber who just finished school last year. I have a few employees who assist with record keeping & clean up. I have not filed taxes as of yet and I have a receipt book to show all transactions. Would I qualify?

        1. Donald – were you in business as of February 15, 2020? That’s a requirement for PPP. If you were you can fill out your tax return and apply without it being filed, though you’ll want to complete it as soon as possible.

    1. Hi, i am very concerned that I missed out already the deadline of applications of financial relief of any kind because of confusing answers from the banks and accounts. I was told that I can’t apply PPP because I am self-employed, owner of a home-based business that provides therapeutic/medical & spa massages. However, two weeks ago I applied as directed by the bank to with DIEL which I still did not hear anything from SBA through email. The funding just got approved today, April 24, 2020. I found out that I should have applied for PPP. Can I still do it? Where and how? Please help me . I need directions. Thank you. I appreciate your valuable assistance as I planned to provide therapeutic medical massages to the Veterans that the government military insurance covers the treatments now.

      1. Congrats for getting approved for EIDL! You can apply for both PPP and EIDL. The self-employed application for PPP opened up later than the one for other types of businesses. You can certainly try your bank and you can fill out a QuickConnect form with Nav (just go to to be matched to lenders making PPP loans. We recommend you do so quickly. When you get matched to a lender make sure you fill out their full application asap. Funding will open Monday and it’s expected to go quickly.

        1. Hi,i am an independent contractor(uber driver) and my line 31 on my schedule c has 3000 dollars on it,can i still apply for a PPP loan?i did the calculation and i will only be getting 600 dollars.Thanks in adcance

          1. Yes you may Rich. Note that today February 22 2021 the White House announced there will be changes for the self employed and independent contractors that may be favorable but we don’t have details yet. When we do we will update this article.