Paycheck Protection Program Loans for Sole Proprietors, Independent Contractors, and Gig Economy Workers

March 4, 2021 UPDATE:

The Small Business Administration (SBA) has released new guidance regarding the Paycheck Protection Program (PPP). These Interim Final Rules (IRF) include changes for the self-employed, freelancers, and gig workers. Learn more here: IRF Document.

Details of the new guidance includes:

  • Instituting a 14-day period, starting Wednesday 2/24/21 during which only businesses with fewer than 20 employees can apply for PPP relief.
  • Changing the PPP loan calculation formula to help sole proprietors, independent contractors, and self-employed individuals receive more financial support.
  • If you've already provided your 1040 with a Schedule C, the system allows you to use the gross income from line 7 to calculate your maximum eligible PPP loan amount.  You don’t need to take any action if you would like to proceed with this new PPP loan amount.
  • All-new official SBA forms: 2483; 2483-SD; 2483-C; 2483-SD-C; 2484; 2484-SD

Here’s information you need to know about how to apply for a PPP loan if you’re a sole proprietor, independent contractor, or gig economy worker.

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Who is eligible to apply for the Paycheck Protection Program (PPP)?

Most small businesses qualify for the Payment Protection Program. This includes:

  • Sole proprietors who report income and pay taxes on a 1040 Schedule C in your personal tax return. Whether you’re a fitness instructor, tutor, freelancer, or side hustler, if you’ve got a Schedule C, you can qualify.
  • Independent contractors who collect 1099-MISC forms (but for the PPP, you’ll need to submit a Schedule C, not your 1099s).
  • Gig economy workers who take on-call jobs provided by companies such as Uber, DoorDash, Lyft, TaskRabbit, and Instacart.

The only stipulation is that your business was operational as of February 15, 2020. If you started your business after that date, you will not be eligible for this program.

PPP loan details

  • Loans available up to $2,000,000
  • 1.00% interest rate and no payments for the first 10 months
  • No collateral or guarantee required
  • PPP loan proceeds can be used for costs related to payroll, rent or lease, mortgage interest payments, utilities services, operational expenses, property damage, supplier costs, and worker protection expenses

Can I apply for PPP funding and collect unemployment?

You cannot receive funds from both unemployment benefits and a PPP loan at the same time. Since you can use the PPP funds to pay yourself, you’ll be considered to be fully covered during the 8-week covered period if you use that timeframe.

Consider the payout of each program to determine which is the best fit for you.


How do I apply for PPP funding?

SmartBiz has helped thousands of American small businesses get the funding they need during the pandemic crisis. We know this new round of the PPP program can be a lifesaver for hard-working entrepreneurs. SmartBiz loans has created a streamlined, online application to help these workers easily apply for the funding they need in 2021.

How much PPP funding can I qualify for?

PPP loans will cover payroll costs including benefits for individual salaries up to $100,000. Contractors and self-employed workers can essentially use a PPP loan to fund their salaries (including wages, commissions, and tips) with a loan that is 2.5x their average monthly net profit, up to $100,000 on an annualized basis. The SmartBiz Loans platform will help you calculate your loan amount.

NOTE: The new legislation changes the PPP loan calculation formula to help sole proprietors, independent contractors, and self-employed individuals receive more financial support. 

What documents do I need to apply?

The application for sole proprietors and independent contractors has been greatly simplified. Here’s a list of items to gather.

  • Tax documents for either 2019 or 2020 - Sole proprietors and independent contractors should use form 1040 Schedule C.
  • Bank account information - You will need your bank account number and routing number. You can find this information on a bank statement, by logging onto your bank’s website, or on a business check.
  • If this is a first PPP loan, the business owner does need to provide a bank statement or invoice/receipt showing business operations over 2/15/2020.
  • Driver’s license or passport number - Have one of these numbers handy so you can enter the number on your loan application.

Are the loans forgiven?

Yes! Funds can be 100% forgiven if used as designated. Self-employed individuals can use a simplified forgiveness application called the ‘EZ Form’. This form applies to you as long as you don’t have employees on payroll. If you do have payroll expenses, then you can use the standard forgiveness application.

Learn more

Visit the SmartBiz Loans website for comprehensive information to help you decide if a PPP loan is right for you: Paycheck Protection Program Details.