In this 5-minute read:
- Do truckers qualify for first or second draw PPP loans?
- What expenses does the PPP loan cover for truckers?
- How can truckers apply for the PPP loan?
IMPORTANT PPP UPDATE: As of March 3, 2021, applicants who report their income with IRS Form 1040 Schedule C (i.e., most independent truckers, sole proprietors, and 1099 workers) will be able to use their GROSS (instead of net) profits to determine their max loan amount. This can make a big impact on the amount you can borrow, depending on how much you make and how you have reported your profits. Read more about the latest 1040 Schedule C/PPP loan rules changes, and see the new rules, and the new PPP application form for Schedule C applicants.
As the next round of the PPP loan has been announced, individuals who work as independent contractors or are self-employed have the opportunity to apply for first or second draw PPP loans by May 31, 2021. That includes certain types of truckers and truck drivers.
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Do all truckers qualify for first or second draw PPP loans?
Many, but not all truckers can apply for the PPP loan. To be eligible to apply, you must either be the business owner of a trucking company, or be an independent contractor or self-employed individual (or own a side business outside of trucking, under which you can apply for PPP funding for that side business). Employees of trucking companies that don’t work as independent contractors or don’t receive a 1099 form for their taxes don’t qualify for the PPP loan, but depending on how many employees the trucking company has, that business may still qualify for a PPP loan to help maintain payroll.
The PPP loan is intended to help small businesses, which includes self-employed individuals and independent contractors, and pretty much anyone who reports 1099 income.
How do you know if you’re eligible for a first or second draw PPP loan?
Truckers (as independent contractors, self-employed individuals, or business owners) can and should apply for first or second draw PPP loans. Which “draw” you apply for is determined by your individual circumstances with the first PPP loan from 2020.
If you did not receive loan forgiveness on your first PPP loan by December 27, 2020, you may: (1) reapply for a First Draw PPP loan if you have returned all or some of your 2020 PPP loan or (2) request to modify your previous First Draw PPP loan amount if you didn’t accept the full amount for which you were eligible.
You can also apply for a First Draw PPP loan if you never received or applied for the PPP loan in 2020.
To qualify for a Second Draw PPP loan, you must meet the following requirements:
- You have already received and used (or will use) your First Draw PPP funding for its authorized uses
- Your business has fewer than 300 employees
- You can show at least a 25% reduction in your gross receipts between comparable quarters in 2019 and 2020
You may be ineligible for the PPP loan if you fall under any of the circumstances outlined in our Eligibility FAQ. But nearly everyone who has 1099 income or is an independent contractor will qualify.
What expenses does the PPP loan cover for truckers?
The PPP loan expense coverage is the same for all businesses, but what that looks like for an independent contractor may vary from a business owner.
In order to receive loan forgiveness, you must use at least 60% of your PPP loan on payroll costs (down from 75% for the PPP loan in 2020). Payroll costs for independent contractors would be your take-home pay, and for business owners, that includes your own pay in addition to payroll for your employees.
Other eligible expenses for the PPP loan include:
- Rent, mortgage, and utilities for your place of business
- Interest payments on debts incurred prior to February 15, 2020
- Refinancing an EIDL loan payments that were made between January 31, 2020 and April 3, 2020
- Operation expenses (that could include payments for software that helps with business operations, delivery costs, gas, accounts and records expenses)
- Any property damage costs that came from the public disturbances in 2020 and were not covered by insurance
- Supplier costs that are necessary for your business operations
- Costs for worker protection, including PPE, in order to maintain the guidelines set in place by DHHS, the CDC, and OSHA
- For business owners: costs related to healthcare benefits for your employees
How can truckers apply for the PPP loan?
Truckers can apply for the PPP loan just as any other business owner or independent contractor would. You’ll need to fill out the PPP loan application with an approved SBA 7(a) lender.
During the application process you will need to determine the loan amount that you qualify for and provide documentation to verify that you are eligible for that loan.
If you are an independent contractor with no employees, you can calculate your maximum loan amount here.
If you are a business owner with employees, you can calculate your maximum loan amount here.
Documentation that you independent contractors may need to have prepared:
- IRS Form 1040 Schedule C
- IRS Form 1099-Misc
- IRS Form 1099-K
- Invoices
- Bank statements
- Book of records
Documentation the business owners with employees may need to have prepared:
- IRS Form 1-3
- IRS Form 940
- W-2s for employees making over $100,000
- Organizational documents (Articles of Incorporation, Certificate of Existence, State LLC Agreement, Certificate of Organization, etc.)
You will also need to be able to show evidence that you were in operation on February 15, 2020 in order to apply for the PPP loan.
Read more about documentation needed to apply for PPP loans.
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