In this 2 minute read:
- Can I get a PPP loan if I had both W2 and 1099 income in 2019 and 2020?
- How do I get a second draw PPP loan if I got one last year?
- Additional PPP resources for self-employed/contractors/gig workers/1099 employees
The Paycheck Protection Program has received significant updates for 2021, including a simpler application form, more business types eligible for PPP loans, additional expenses allowed, and the new PPP second-draw loans for businesses that got PPP funding in 2020. One of the most common questions we hear is from people who had both a full-time job as well as side-hustle/1099 or contract or freelance work the past couple of years. Let’s go over some key points.
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IMPORTANT PPP UPDATE: As of March 3, 2021, applicants who report their income using 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.
I had W2 income as well as 1099 income in 2019 and 2020. Can I qualify for a PPP loan?
Yes, if you had ANY 1099 or other self-employed income in 2019 or 2020 you should definitely apply for a PPP loan. Receiving other forms of income (e.g., from an employer or passive income source or investments) does not disqualify you from getting a PPP loan. You can get forgivable PPP funding and that can make a big difference for a lot of people in a lot of situations.
If I have independent contractor or side hustle or gig work income and got a PPP loan in 2020, can I get a second draw PPP loan in 2021?
If you qualified for a PPP loan and used the funds in the appropriate manner, you can apply for a PPP second draw loan as long as you meet the eligibility requirements for a second draw PPP loan. Basically:
- You have to have fewer than 300 employees; and
- You have to show evidence that you have used your PPP funding for approved expenses and payroll costs, or will have used them by the time you receive your second draw loan funds; and
- You have to demonstrate at least a 25% reduction in revenue in at least one quarter in 2020 compared to 2019. More details on calculating a 25% loss here
IF YOU DON’T HAVE QUARTERLY REVENUE DATA:
The SBA provides that a borrower that was in operation in all four quarters of 2019 is deemed to have experienced the required revenue reduction if it experienced a reduction in annual receipts of 25 percent or greater in 2020 compared to 2019 and the borrower submits copies of its annual tax forms substantiating the revenue decline.
So basically if your 1099 forms, receipts 1040 Schedule C, etc. for your 2020 tax return show a 25% revenue decline compared to 2019, this is good enough to qualify for a second draw PPP loan.
For more details check out our FAQ guide: How to apply for Second Draw PPP Loans.
Additional PPP loan resources for independent contractors, gig workers, self-employed individuals
Here are some additional resources to help you get educated about getting your PPP loan.
- Can independent contractors & self employed get a first or second draw PPP loan in 2021? (new FAQs!)
- When / how can independent contractors & self-employed apply for PPP loans in 2021?
- Don’t make these PPP mistakes!
- Have questions about PPP for Schedule E filers?
See our full PPP FAQ.
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