In this 5-minute read:
- Are landscapers and other lawn professionals eligible for the PPP loan?
- How to calculate your maximum PPP loan amount
- Examples of approved PPP loan expenditures for landscape and lawn professionals
- Applying for PPP loan forgiveness
The Paycheck Protection Program allows small businesses independent contractors, and other self-employed individuals (including independent lawn service professionals and landscapers) to apply for COVID-19 stimulus funding in the form of a forgivable loan. This program was extended through May 31, 2021 so more people would receive the funding they need to help their businesses.
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Are landscapers and other lawn professionals eligible for PPP loans?
As a landscaper or another type of yard or lawn services professional, you may be eligible for the PPP loan. Your exact profession doesn’t matter as much as your employment status. Are you a business owner or otherwise self-employed individual? Or are you an employee that receives a W2 every tax season?
The PPP loan is intended for small business owners, sole proprietors, gig workers, independent contractors, and self-employed persons. So if you are an independent contractor or sole proprietor and receive 1099 forms or file your taxes on IRS Form 1040 Schedule C, then you’ll meet the first box for eligibility. Whatever your employment status is, you’ll just need your tax forms to verify your eligibility.
If you are a W2 employee that works for a lawn services or landscaping company, you won’t be able to apply for the PPP loan for your W2 job. However, if you have a side gig doing lawn services, landscaping, sprinkler repair, pest control, or any other or side hustle/1099 job, you may be eligible with one of those and could still apply for the loan.
New PPP rules for 2021
In 2021, a few rules have been amended to allow even more people to benefit from this program. Those are:
- IRS 1040 Schedule C borrowers can use their gross instead of net profits to calculate their maximum loan amount. (This can mean the difference between earning enough annual revenue to qualify for a PPP loan and not being eligible.)
- Borrowers with student loan delinquency can now apply for the loan (assuming they meet the other eligibility requirements)
- Non-citizen borrowers who are lawful residents with an ITIN can now apply for the loan
Additional eligibility requirements for the PPP loan
Beyond owning a business, working as an independent contractor, or being self-employed, there are a few other requirements you must meet depending on if you are applying for your first or second PPP loan.
For a first draw PPP loan, you must have been in business as of February 15, 2021, and you must have earned at least $4,800 in either 2019 or 2020. Learn more about the minimum earning threshold to qualify for a PPP loan.
For second draw PPP loans, the eligibility requirements are similar to first-draw loans, but in addition:
- You must have already received a first-draw PPP loan and spent it on authorized expenses before the disbursement from your second draw loan comes in
- You must be able to demonstrate a 25% (or greater) revenue reduction when comparing any quarter in 2020 to 2019
- (You must have fewer than 300 employees)
These are not exhaustive lists of the eligibility requirements for the PPP loan, but they do include the basics that allow most businesses to qualify. For more information and special circumstances that may apply, check out our PPP FAQ.
How to calculate your maximum PPP loan amount as an independent lawn services or landscaping professional without employees
You don’t get to choose the amount of the PPP loan that your landscaping or lawn business can qualify for. There is a specific calculation in place to determine the maximum amount you can borrow. Follow the steps below to determine how a self-employed individual without employees can calculate their max loan amount:
- Get your 2019 or 2020 IRS 1040 Schedule C and find line 7 for your gross profit. Use this number to calculate your loan amount. If that number is higher than $100,000, reduce it to $100,000.
- Take your number from step 1 and divide it by 12 to get your average monthly profit.
- Multiply your average monthly profit by 2.5 to get your max loan amount.
- Bonus: If you have an EIDL (Economic Injury Disaster Loan) in 2020, add any outstanding amount of the loan made between January 31, 2020 and April 3, 2020 to your max loan amount. Just don’t include any advances you received on your EIDL because that doesn’t have to be paid back.
Understanding this calculation, or at least knowing the maximum amount you can borrow is really helpful for planning out your expenses so that you can receive loan forgiveness.
Does your landscaping or lawn business have employees? Our FAQ covers how to calculate your maximum loan amount with employees.
Approved PPP loan expenditures for landscape and lawn professionals
Because the PPP loan is a forgivable loan intended to help businesses through this trying time, there are certain rules for how you can spend this loan if you wish to receive full forgiveness on it. If you follow the rules, and apply for PPP loan forgiveness appropriately, you won’t ever have to pay your loan/s back!
There are two main categories for spending your loan: payroll and other business expenses. You must spend at least 60% of your loan on payroll/income expenses in order to receive loan forgiveness. If you don’t have any employees, that becomes super easy because you can use that 60% to pay your own income. You could even use the entire loan to pay your income if you wanted to. But if you have employees you’ll need to make sure you use that 60% to keep them on staff and maintain their compensation levels.
The other (up to) 40% of your loan can be spent on the following business expenses:
- Mortgage, rent, utilities: the PPP loan can help cover the costs of an office or storage space for your business. Do you operate out of your home? You can use your PPP loan to cover any portion of these expenses that you would deduct from your business taxes
- Interest payments for debts: any interest payments on business-related debts (credit card, business loan, equipment or vehicle financing) can be covered by your PPP loan
- Supplier costs: your PPP loan can cover any supplier costs for contracts or purchase orders that are in place before the first day of your covered loan period
- Operational costs, including any business software or cloud computing service that is essential for the function of your business—payment processing, inventory management, accounting, product or service delivery, expense tracking, or other sales and billing services
- COVID protection: many businesses have incurred COVID related expenses while trying to maintain public health guidelines. This might include PPE, sneeze guards, cleaning supplies, or business expansions to help with social distancing
- Property damages: if your business property was damaged in 2020 due to the public disturbances and riots, you can use your PPP loan to help cover and damages that insurance did not cover
As you spend your PPP loan, it’s important to keep good records of everything that you spend it on so that you can receive loan forgiveness. Keep documentation like receipts, invoices, and more to help verify these expenses.
You might like: Tracking PPP expenses to maintain forgiveness (tools and tips!)
Apply for PPP loan forgiveness
The final step of the process is to apply for loan forgiveness. At the end of your covered period, after you’ve spent your PPP loan fund appropriately, you must apply for loan forgiveness within 10 months.
To apply for loan forgiveness, you should first check if your lender has opted-in to the new SBA PPP Direct Forgiveness Portal. If your PPP loan was for $150,000 or less, AND if your lender has opted-in to the use of the platform, you will be able to submit your PPP loan forgiveness application online directly to the SBA, using the electronic equivalent of SBA Form 3508S. For full details, read our post about the new SBA PPP Direct Forgiveness Portal and other recent rule changes.
If the above doesn’t apply to you, contact your PPP lender and complete the correct application form. First ask your lender to help you complete the correct PPP loan forgiveness application for your business type. There are a few different applications, so they’ll make sure you get the right one. Fill out your application and gather all of the documents you need to verify your expenses. Then turn that all back into your lender and they will process it with the SBA.
Once a decision has been made, your lender will notify you of that decision.
More resources for PPP loan forgiveness:
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