While you cannot use the proceeds received from a PPP loan to pay individual contractors or sole proprietors, you can assist them with documentation and even introductions to your banker.
Can you get a PPP loan as an independent contractor
Self-employed workers and independent contractors apply for PPP loans much the same way as other small businesses.
You’ll need to determine your eligibility, calculate your loan amount, determine your PPP loan use case, and then submit an application with an SBA-accredited bank.
What do independent contractors need for PPP loan
Remember: You must provide the 2019 Form 1040 Schedule C with your PPP loan application in order to substantiate the loan amount, as well as a 2019 IRS Form 1099-MISC detailing non-employee compensation, invoice, bank statement, or book of record that establishes you are self-employed.
Can independent contractors apply for PPP
If you are an independent contractor or self-employed, you may be eligible for Paycheck protection program (PPP) loans/grants*, SBA’s Economic Injury Disaster Loans (EIDL), and/or Unemployment Compensation for losses of income related to the coronavirus pandemic.
What can I spend my PPP loan on as an independent contractor?
- Replace your compensation (based on your 2019 income)
- Pay interest payments on a mortgage or loan (such as an auto loan) you use to perform your business*
- Make business rent payments*
- Make business utility payments*
Can I get the PPP loan without a business
Who Can Apply? As a sole proprietor or independent contractor, you may be eligible for a PPP loan if all of the following are true: You were already in operation on February 15, 2020.
(With very few exceptions, you can’t have started a business this March or April and expect to get Ppp funds.)
What can PPP loan not be used for
Don’t: Spend your PPP money on ineligible expenses That means using the bulk of your funds (at least 60%) on payroll costs, such as salaries, hourly wages, paid sick leave and group insurance benefits.
How do independent contractors get Ppp forgiveness
In order to receive full forgiveness for your PPP loan, self-employed workers need to follow these guidelines: Use at least 60% of your loan to cover “payroll costs,” which for self-employed workers is essentially their salaries (including wages, commission, and tips), up to $100,000 on an annualized basis.
How do I pay myself with PPP loan self-employed
You can use the PPP funds to pay yourself through what’s called owner compensation share or proprietor costs.
This is to compensate you for a loss of business income. To take the full amount of owner compensation share, you will have to use a covered period of at least 11 weeks weeks.
Can you use a PPP loan to start a business
Yes: but only if you were operational on February 15, 2020. Here’s everything you need to know about getting a PPP loan for a new business (and some alternative funding options).
Do PPP loans have to be paid back self-employed
Finally, you must file your IRS Form 1099-MISC for 2019 that details all of your non-employee compensation, bank statements, invoices, or other records showing that you are self-employed.
If you do not qualify to have your PPP loan forgiven, you must repay the loan balance in two or five years at a 1% interest rate.
Can self-employed with no employees get PPP loan
For sole proprietors or independent contractors with no employees, the maximum possible PPP loan is therefore $20,833, and the entire amount is automatically eligible for forgiveness as owner compensation share.
Can 100% of PPP loan be used for payroll
Can you use your whole PPP loan to replace your compensation? Theoretically, yes. A minimum of 60% of your PPP loan expenses must be spent on payroll to be eligible, but there’s no maximum.
Therefore, you could spend 100% of your PPP loan on compensation replacement, and it’d still be forgivable.
Can a PPP loan be Unforgiven
For PPP loans approved by SBA prior to June 5, 2020, your PPP Note has a 2-year term, but you and your lender may mutually agree to extend your repayment term for any unforgiven amount if needed.
For PPP loans approved by SBA on or after June 5, 2020, your PPP Note has a 5-year term.
Can I get a PPP loan if I do Instacart
Through the recently-enacted Payroll Protection Program (“PPP”), workers in the gig economy, such as Uber or Lyft drivers and Instacart or DoorDash shoppers, along with independent contractors and freelancers, are eligible to apply for forgivable loans from the Small Business Administration, starting on April 10, 2020.
Do PPP loans have to be repaid
PPP loans (the full principal amount and any accrued interest) may be fully forgiven, meaning they do not have to be repaid.
If you do not apply for forgiveness, you will have to repay the loan.
What can you not do with a PPP loan
No, the PPP cannot be used to pay outstanding business, corporate, or property taxes.
However, PPP funds can be used to cover state and local payroll taxes that you (the employer) have to pay over the loan period.
Federal employment taxes are not a forgivable expense.
What kind of loan can I get as an independent contractor
Independent contractors may qualify for unsecured or secured personal loans, variable-rate loans, business credit cards, lines of credit, debt consolidation loans, payday loans, and more.
What happens if you get a PPP loan without a business
It is illegal to make false statements to a financial institution, so if you were to lie on a PPP loan, you could be charged with this federal crime.
This act is criminalized under section 1014 and if convicted, you can face quite a hefty fine along with imprisonment for up to 30 years.
Who is not eligible for a PPP loan
If both your net profit and gross income are zero or less, you are not eligible for a PPP loan.
Do You Need LLC for PPP loan
Yes, Even if You Have Not Formed an LLC, You Still Qualify However, if you filed a Form 1040 Schedule C on your 2019 tax return, you likely qualify to receive a PPP loan.
Do you have to report PPP loan on taxes
No. Loan proceeds received under the Paycheck Protection Program (PPP) are not taxable income, regardless if the loan was forgiven or not.
Forgiven PPP loans are not considered cancellation of debt income, and as such, you should not report these loan proceeds on your tax return.
Can independent contractors get SBA
Are independent contractors eligible for SBA loans? Yes, independent contractors are eligible for SBA loans.
Whether you’re a freelancer, gig worker, or 1099 contractor, you’re likely eligible for PPP financing to some extent.
Can I use PPP to start a business
If you started a new business in 2020, can you still get a PPP loan?
Yes: but only if you were operational on February 15, 2020. Here’s everything you need to know about getting a PPP loan for a new business (and some alternative funding options).
Do PPP loans go on your credit report
There does not appear to be any credit check required for PPP loans. That’s somewhat surprising because these loans technically fall under the SBA 7(a) loan program, which typically does require acceptable credit.
Can sole proprietors with no employees apply for PPP
If you are a sole proprietor, you can still apply for forgiveness regardless of if you have employees or not.
The PPP forgiveness guidelines on not reducing headcount or salary do not apply to self-employed owners.
Can I buy a car with my PPP loan
PPP 101: Don’t use the loan proceeds on jewelry, fancy cars, and child support.
How can I avoid paying back a PPP loan?
- Use it for eligible expenses
- Keep your employee headcount up*
- Don’t reduce an employee’s wages by more than 25%*
- Document everything
- Talk with your lender
- Apply for loan forgiveness
Are they investigating PPP loans
The Office of the Inspector General (OIG) issued a report in May that identified more than 70,000 loans totaling over $4.6 billion in potentially fraudulent PPP loans.
How do I get my PPP loan forgiven as a sole proprietor
PPP borrowers are eligible for forgiveness in an amount equal to the sum of their eligible expenses during their chosen 8-week to 24-week Covered Period.
To be considered for full forgiveness, borrowers must use at least 60% of their loan proceeds on payroll costs.
Can I use 100 PPP for payroll self-employed
The 60/40 rule states that 60% of your PPP loan must be used on payroll costs, and the remaining 40% can be used on other eligible expenses (rent, mortgage interest, utilities, etc.).
However, as a self-employed worker, you can claim all 100% of your PPP loan as payroll under compensation replacement.
Citations
https://www.cnbc.com/2021/06/14/small-business-bank-account-american-express-puts-kabbage-acquisition-to-work-with-first-checking-account.html
https://help.kabbage.com/s/article/Funding-Loans
https://newsroom.kabbage.com/news/kabbage-soars-to-over-209000-approved-paycheck-protection-program-applications-for-5-8-billion/
