What can independent contractors use PPP loans for? (approved expenses 2021)

In this 4-minute read:

  • What can independent contractors spend their PPP loan on?
  • What constitutes an independent contractor for the PPP loan?
  • Additional resources for independent contractors and self-employed people
  • Remember to APPLY FOR YOUR PPP FIRST OR SECOND DRAW LOAN BEFORE MAY 31, 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.

The coronavirus pandemic has impacted, and continues to impact, businesses all over the United States. Some businesses have struggled to keep the lights on while others have struggled to keep up with demand. 

If your business has taken a financial toll due to COVID-19, the U.S. Small Business Administration and Treasury Department have opened another round of the Paycheck Protection Program with a renewal of $284 billion, and an application deadline of 3/31/21 (THIS HAS BEEN EXTENDED TO 5/31/21). Whether you received funding during the 2020 PPP or not, your business may qualify for additional funds this round. 

Independent contractors and self-employed business owners (including millions of people who don’t KNOW they are technically “business owners”) also qualify for the PPP loan and have similar conditions to how these funds can be spent. 

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!

What can independent contractors spend their PPP loan on?

The PPP loan is intended to help businesses keep operations running during financial hardship, whether that’s paying employees or getting the rent check sent in. To achieve full PPP loan forgiveness, at least 60% of the funds must be used in paying “payroll expenses,” which for many independent contractors and self-employed people means paying themselves, and you can spend up to 100% of your funds to pay yourself if you qualify and follow the rules.

Independent contractors, sole proprietors, and self-employed individuals are entitled to the same first and second draw PPP loans that more traditional business types can apply for. And the loan also covers the same types of expenses for each. 

For this round of the PPP loan, at least 60% of the total loan must go towards paying for payroll costs. As an independent contractor, you may not have any employees on your payroll, but you do count as an employee. So instead of calculating the payroll for employees, you would calculate your individual take-home pay from your business. 

Learn more about how to calculate the maximum PPP loan amount for independent contractors.

Start Your PPP Loan Application

Beyond payroll, additional expenses that you can spend your PPP loan on in order to still receive loan forgiveness include:

  • Mortgage, rent, and utility payments
  • Interest payments on debts incurred before February 15, 2020
  • Refinancing an EIDL loan from the SBA made between January 31, 2020 and April 3, 2020
  • Certain operations expenses (payments for software that helps with your business operations, delivery costs for products or services, accounting and records expenses)
  • Property damage costs that relate to the public disturbances from 2020 and were not covered by insurance
  • Covered supplier costs that are essential to operations
  • Costs for worker protection, like PPE or operating expenses necessary to keep in line with the requirements from DHHS, the CDC, and OSHA

What constitutes an independent contractor for the PPP loan?

How can you tell if your individual business as an independent contractor qualifies for the PPP loan? In short, pretty much anyone that files a 1099-Misc 1040 Schedule C for their taxes can apply for the PPP loan. 

This can include any number of freelancing, self-employed, and other contracted jobs out there:

  • Content creators
  • Photographers
  • Copywriters
  • House cleaners
  • Personal trainers
  • Construction contractors
  • Cosmetologists
  • Drivers for Uber, Lyft, Doordash, Postmates, etc.
  • Virtual assistants
  • Data entry workers
  • Truckers
  • Bookkeepers
  • Tutors
  • The list goes on…

Don’t count yourself out as a business that deserves some financial assistance just because you aren’t the owner of a “traditional” business. Your business is your livelihood and the PPP loan is meant for independent contractors and self-employed people as much as it is meant for any other business. 

Additional PPP loan resources for independent contractors

Get the assistance that your business deserves so that you can keep operations running. We have additional resources for independent contractors that we encourage you to look through as you apply for the PPP loan. 

See our full independent contractor PPP FAQ

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.