How to calculate your maximum PPP loan amount: self-employed with no employees

Important PPP update for 2021

IMPORTANT PPP UPDATE: As of March 3, 2021, applicants who report their income with IRS Form 1040 Schedule C (i.e., most independent contractors, 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.

Background: On December 22, 2020, Congress passed a bill renewing funding under the CARES Act, including an additional $284 billion earmarked for America’s struggling small businesses. The rules and application process for PPP loans and forgiveness have been modified, with more businesses eligible for PPP loans, more expenses forgivable, and a simplified application process. Also there is provision for “second draw” PPP loans for businesses that received PPP funding in 2020. Start your PPP loan application now!

In this 2-minute read:

  • Maximum PPP loan amount allowed for self-employed individuals or independent contractors with no employees

The Paycheck Protection Program allows small businesses with fewer than 500 employees (and in some cases, more than 500 employees) to take out loans to help them through the financial struggles of the COVID-19 crisis. This includes independent contractors, sole proprietors, and business owners that don’t have any employees. 

This article will help you calculate the maximum amount that your business can take out for your PPP loan if you are self-employed without any employees.

Contract workers, gig workers, sole proprietors, and self-employed people can qualify for up to $50,000 in forgivable PPP loans! We built Fast Lane as a simple, 5 minute process to help you get your PPP application submitted ASAP. Start your free PPP application now!

If I don’t have any employees, how do I calculate how much I can borrow for PPP loans?

Independent contractors, self-employed individuals, and sole proprietors have to calculate their payroll expenses a little differently from the traditional small business owner that does have hired employees. (If you have employees, read this guide.)

Follow these steps to calculate the maximum amount that you can request for your PPP loan. 

Step 1: Find your 2019 or 2020 IRS Form 1040 Schedule C

Take line 7 from your 2019 or 2020 IRS Form 1040 Schedule C. This should be your GROSS INCOME from 2019 or 2020. (You may also elect to use your net profits from line 31, but in most cases this will result in a lower PPP maximum loan amount.) 

If you haven’t filed your 2020 tax returns yet, then fill it out to determine that value. 

If that amount is more than $100,000, reduce it to $100,000 (more than this is not allowed for an annual salary amount under the PPP loan). 

If both your net profit and gross income are zero or less, you are not eligible for a PPP loan.

Step 2: Calculate your average monthly profit

Take the amount you gathered in Step 1 and divide it by 12. This will give you your average monthly profit from the last year. 

Step 3: Multiply your average monthly profit by 2.5

NOTE: For the PPP loan, AS OF MARCH 3, 2021, Schedule C applicants are allowed to request 2.5 times the amount of your average monthly GROSS profit in order to help you through the 8-24 weeks after you receive your loan. 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.

Step 4: Add any outstanding EIDL loan amount to your total

If you applied for an Economic Injury Disaster Loan (EIDL) between January 1, 2020 and April 3, 2020, then you can add any amount of that loan to your PPP loan request. 

Do not include any amount of any EIDL “advance” that you have received under COVID-19 (since it doesn’t have to be repaid). 

Here’s an example of what that calculation might look like if you have an outstanding EIDL loan:

Annual gross profit: $48,000 (no employees, and your annual profits don’t exceed $100,000)
Average monthly profit: $4,000
Multiply by 2.5: $10,000
Add outstanding EIDL loan amount of $5,000
Total amount to request for PPP loan: $15,000

1099s, independent contractors, and self-employed individuals can qualify for up to $50,000 in PPP stimulus funding. PPP Fast Lane simplifies the application process!

Contractors, gig workers, sole proprietors, and eligible self-employed individuals can qualify for up to $50,000 in forgivable PPP loans for 2021! We built Fast Lane for you.

  • Simple, five minute data collection process
  • Guides you through every step along the way
  • Automated first and second draw loan applications

 Put your PPP application in the Fast Lane

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Must use the same email address for each PPP loan!

By clicking “Start application”, I understand and agree that this program is subject to the PPP Loan Assistance Terms and the Terms of Service.

By providing your mobile phone number, you consent to receive text messages sent by an automatic telephone dialing system about Womply products or services from or on behalf of Womply. You understand that consent to these terms is not a condition of PPP application approval or the purchase of any Womply products or services. Message and data rates may apply. Text STOP to cancel.