Can independent contractors and self-employed individuals get PPP loans?

In this 2-minute read:

  • Can independent contractors, sole proprietorships, and self-employed people get PPP loans?
  • Can these PPP loans be forgiven?
  • What counts as payroll for independent contractors or self-employed people?
  • What if I don’t have any employees?

As the CARES Act has been signed into law and businesses are working through eligible lenders to get their PPP loans, some people are left wondering if they are able to get emergency loans through the Paycheck Protection Program. 

Sign up for your Womply Free account and we’ll keep you updated on new funding opportunities. Customer relationships thrive when local businesses and consumers are connected through Womply data and technology.

It’s been made clear that the primary focus of the PPP is to enable employers to keep their staff members paid, so what about those business owners or self-employed individuals that don’t have employees?

Can independent contractors and self-employed business owners get PPP loans?

The short answer is yes. 

Starting April 10, 2020, independent contractors, sole proprietorships, and self-employed individuals can apply for and receive loans to cover their payroll and other certain expenses through existing SBA lenders.

Important: in a supplement the treasury department released on 4/14/20, they provided clarification on what documentation would be required, how to calculate covered payroll expenses, how to get PPP loans forgiven, and additional information for independent contractors and self-employed individuals applying for PPP loans. Read more here.

What if I don’t have any employees? Can I still qualify for a PPP loan?

For independent contractors, sole proprietors, and self-employed individuals there are still requirements in place that you have to meet in order to apply for a PPP loan. The main one is that you must have been in operation by February 15, 2020. 

Like other businesses, you will also be required to submit paperwork and documentation to verify things like:

  • Payroll process records
  • Payroll tax filings
  • Form 1099-MISC
  • Income and expenses for your business

If you don’t have that kind of documentation, you may need to supplement your paperwork with bank statements that demonstrate the amount you are paid (or pay yourself).

Click to read our full list of required documentation for application for a PPP loan

Click here to start your Paycheck Protection Program loan application for free

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Can PPP loans for independent contractors be forgiven?

Just like other businesses, if you use your loan for approved, specific purposes, your PPP loan for an independent contractor or self-employed individual can be forgiven. 

In order to have your loan forgiven, the funds must only be used to cover payroll costs, mortgages, rent, and other utilities over the course of the 8 weeks after receiving the loan (and you must apply with your lender for loan forgiveness—read the link below for more info). 

The loan can be used for other legitimate business expenses, but you may be required to pay back any portion of the loan not used for the specific items outlined above. 

Click to read our complete article about requirements for PPP loan forgiveness

What counts as payroll costs for an independent contractor?

For independent contractors and self-employed people, payroll costs can include any wages, commissions, income, cash tips (based on employer records of past tips or, in the absence of such records, a reasonable, good-faith employer estimate of such tips), or net earnings that they receive. 

This is capped at $100,000 on an annualized basis for each employee.

For more info, see these helpful links:

  • Avoid common application mistakes: HERE
  • Running status updates for PPP applications: HERE 
  • View Womply’s recorded webinar: HERE
  • See Womply’s webinar slides: HERE

There’s still time to apply for a PPP loan, but hurry! The extended deadline for application is August 8, 2020

If you haven’t applied for your PPP loan and you determine it’s right for you, there is still time. Talk to your lender and get your application submitted ASAP.

Sign up for your Womply Free account and we’ll keep you updated on new funding opportunities. Customer relationships thrive when local businesses and consumers are connected through Womply data and technology.

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