You are eligible for a PPP loan if: (i) you were in operation on February 15, 2020; (ii) you are an individual with self-employment income (such as an independent contractor or a sole proprietor); (iii) your principal place of residence is in the United States; and (iv) you filed or will file a Form 1040 Schedule C for 2019. However, if you are a partner in a partnership, you may not submit a separate PPP loan application for yourself as a self-employed individual. Instead, the self-employment income of general active partners may be reported as a payroll cost, up to $100,000 annualized, on a PPP loan application filed by or on behalf of the partnership. Partnerships are eligible for PPP loans under the Act, and the Administrator has determined, in consultation with the Secretary of the Treasury (Secretary), that limiting a partnership and its partners (and an LLC filing taxes as a partnership) to one PPP loan is necessary to help ensure that as many eligible borrowers as possible obtain PPP loans before the statutory deadline of June 30, 2020. This limitation will allow lenders to more quickly process applications and lower the burdens of applying for partnerships/partners.
The Administrator has further determined that permitting partners to apply as self-employed individuals would create unnecessary confusion regarding which entity, the partner or the partnership, applies for partner and LLC member income, and would generate loan proceeds use coordination and allocation issues. Rent, mortgage interest, utilities, and other debt service are generally incurred at the partnership level, not partner level, so it is most natural to provide the funds for these expenses to the partnership, not individual partners. In addition, you should be aware that participation in the PPP may affect your eligibility for state-administered unemployment compensation or unemployment assistance programs, including the programs authorized by Title II, Subtitle A of the CARES Act, or CARES Act Employee Retention Credits.
SBA will issue additional guidance for those individuals with self-employment income who: (i) were not in operation in 2019 but who were in operation on February 15, 2020, and (ii) will file a Form 1040 Schedule C for 2020.
Section 1(a) of April 14 Guidance
- What certifications need to be made for PPP?
- What happens if PPP loan funds are misused?
- How can PPP loans be used?
- What forms do I need and how do I submit an application?
- Do independent contractors count as employees for purposes of PPP loan forgiveness?
- Can my PPP loan be forgiven in whole or in part?
- When will I have to begin paying principal and interest on my PPP loan?
- Is the PPP ‘‘first-come, first-served?’’
- Can I use e-signatures or e-consents if a borrower has multiple owners?
- Can I apply for more than one PPP loan?
- What will be the maturity date on a PPP loan?
- What is the interest rate on a PPP loan?
- Do independent contractors count as employees for purposes of PPP loan calculations?
- Is there anything that is expressly excluded from the definition of "payroll costs" for the PPP?
- What qualifies as ‘‘payroll costs’’ for PPP?
- SBA Guidance Lookup
- April 28, 2020 PPP Interim Final Rule, Seasonal Employers
- April 27, 2020 Guidance Memo, XML File Submission Process for Paycheck Protection Program
- April 24, 2020 PPP Interim Final Rule, Promissory Notes, Authorizations, Affiliation, and Eligibility
- April 14, 2020 PPP Interim Final Rule, Additional Eligibility Criteria and Requirements for Certain Pledges of Loans
- April 3, 2020 Privacy Impact Assessments
- April 3, 2020 PPP Interim Final Rule
- April 3, 2020 PPP Affiliation Interim Final Rule