In this 7-minute read:
- Can developers, programmers, coders and other IT professionals apply for the PPP loan?
- Maximum PPP loan calculation for eligible developers and IT professionals
- How should IT professionals spend their PPP loans in order to receive loan forgiveness?
- Steps to apply for PPP loan forgiveness
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Can developers, programmers, coders, and other IT professionals apply for PPP loans?
Developers, programmers, coders, and other IT professionals can absolutely apply for the PPP loan when available, so long as your employment status allows you to do so (and you meet the additional eligibility requirements outlined below).
The first checkbox for eligibility is that you need to be a business owner, independent contractor, sole proprietor, or otherwise eligible self-employed individual. And you must have the tax filings to verify your status as such. If you receive a 1099 or file a Schedule C (form 1040) for your taxes, you meet that first requirement.
If you work for a company as a developer, programmer, or IT professional and receive a W2 for that job, then you wouldn’t qualify for the PPP with your W2 job. However, if you have any side gigs that count as independent contractor work and you make at least $4800 in gross profits on an annualized basis, then you could apply for the PPP loan with your side gig.
Currently, the SBA is accepting applications for first or second draw PPP loans. A first draw loan is for those who are receiving the PPP loan for the first time and a second draw loan is for those who have already received a PPP loan.
First draw loan eligibility requires (in addition to other PPP eligibility requirements) that you must meet the right employment status and have been in business since February 15, 2020 or before. (You also can’t have more than 500 employees… which is typically not an issue for IT professionals and coders.)
For second draw PPP loans, you must (1) have already received a PPP loan, (2) have spent your first PPP loan on authorized expenses before your second draw loan is disbursed, (3) be able to show a revenue reduction of 25% or more when comparing any quarter in 2020 to 2019, and (4) have fewer than 300 employees.
These are not exhaustive lists, so if you have other questions about eligibility or want to learn more about special circumstances that may apply, please visit our PPP FAQ.
Maximum PPP loan calculation for eligible coders, web developers, and IT professionals
PPP funds are limited so you can’t just apply for any amount that you want. There’s a specific calculation in place depending on how your business is set up and whether you are applying as a self-employed individual with or without employees.
We’ll go over the steps to calculate your PPP loan amount for self-employed individuals without employees.
Step 1: Get your 2019 or 2020 IRS Form 1040 Schedule C. You can choose which year to use (we’d obviously choose the one that gets you the largest loan). On that form, find line 7 for your gross profits. If that number is larger than $100,000, lower it to $100,000.
Step 2: Divide your Step 1 number by 12 to get your monthly average profits.
Step 3: Multiply your monthly average by 2.5 to get your maximum PPP loan amount.
Step 4 (if applicable): Add any outstanding amount of an Economic Injury Disaster Loan made between January 31, 2021 and April 3, 2021 to your maximum loan amount. Just don’t add any advance that you received on an EIDL because that doesn’t have to be paid back.
Do you have employees? Check out our FAQ to learn how to calculate your max loan amount with employees.
How should eligible IT professionals, front-end developers, coders, etc. spend their PPP loans in order to receive loan forgiveness?
The PPP is a great program for business owners and self-employed individuals because it allows you to receive completely forgivable stimulus funding. You just need to spend your PPP funds on authorized expenses in order to receive that forgiveness. In essence, that loan funding then becomes free money—you never have to pay it back.
Payroll and income
First, you need to know that at according to the rules, at least 60% of your PPP loan has to go toward payroll expenses. If you have any employees, then you need to use this portion of the loan to maintain compensation levels (as well as your own). If you don’t have any employees, then you can use that 60% (or the full loan, if you choose) to cover your own income.
Other eligible expenses
The other (up to) 40% of your PPP loan can be used on the eligible business expenses outlined below:
- Mortgage, rent, utilities: any office space that you have mortgage, rent, or utility payments on can be covered by your PPP loan. If you operate your front end developing, coding, or IT support business out of your home, you can use the PPP loan to help pay any portion of these expenses that you would be able to deduct from your business taxes
- Interest payments: if you have any business-related debts (credit card, business loans, etc.) then you can use your PPP loan to help cover the interest payments on those debts
- Expenses for operations: your PPP loan can be used to cover business software and cloud computing services that your essential for the function of your business. This can include billing and sales functions, invoicing, processing payments, inventory management, or any other application that is necessary for product or service delivery
- Supplier costs: any costs related to supplier contracts or purchase orders that were in place before the first day of your covered loan period are eligible PPP expenses
- COVID-19 protection: many businesses have incurred COVID-19 related costs to adhere to local public health guidelines, including PPE, sneeze guards, business expansions, and more. You may use your PPP loan to help cover business-related COVID costs that you have incurred
- Property damage: if your business was damaged due to the public disturbances in 2020, your PPP loan can help cover any costs that insurance did not cover
It’s really important to plan out and track your PPP loan expenses so that you can verify where your funds went and receive loan forgiveness.
This can help: Tracking PPP expenses to maintain forgiveness (tools and tips!)
Steps to apply for PPP loan forgiveness
After your covered loan period has ended and you’ve spent your entire PPP loan appropriately, you can apply for PPP loan forgiveness.
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:
- Ask your lender for the correct forgiveness application (there are multiple applications depending on your business, so they’ll make sure you get the right one)
- Ask them to help you fill out your application, and gather any documents that can verify how you spent your funds—invoices, bank statements, receipts, cancelled checks, etc.
- Turn your application and documentation into your lender. They’ll let you know if there’s anything else they might need
After that, your lender will process your application with the SBA and they will notify you as soon as a decision has been made. If you haven’t heard back within a couple of weeks, feel free to reach out to your lender with any questions that you have.
Learn more about PPP loan forgiveness:
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