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Independent Contractors, Self-Employed Can Now Apply for PPP Loans


Starting Friday, April 10, 2020, independent contractors and self-employed workers receiving 1099-MISC forms affected by the COVID-19 pandemic are eligible to qualify and apply for forgivable Paycheck Protection Program (PPP) loans under the U.S. Small Business Administration.

However, the process of applying and receiving funds continue to be beset with issues. While small businesses and sole proprietorships could begin submitting applications Friday, April 3, 2020, many businesses and banks and borrowers continue to experience difficulties and frustration because of changing guidance and requirements and the sheer number of applications coming in.

Without more guidelines from the SBA, there’s confusion about how the rules apply to the self-employed and independent contractors, Holly Wade, director of research and policy analysis for the National Federation of Independent Business, told American Banker in an April 9 article.

Ericksen Krentel continues to monitor the ever-changing guidance and requirements for the PPP loan application and debt forgiveness process to ensure you receive the maximum benefits. Our team is ready to help create a customized approach for your organization to effectively, and correctly, use those funds to guarantee maximum forgiveness. If you received PPP funds and need assistance in allocation and forgiveness documentation or calculation, please contact us by clicking here.

Your Ericksen Krentel professional can also help self-employed workers and independent contractors determine which form of relief is best for you, whether it’s a PPP loan, tax credits or an SBA Economic Injury Disaster (EIDL) Loan.

The PPP, which is part of the $2 trillion Coronavirus Aid, Relief and Economic Security (“CARES”) Act signed into law on March 27, 2020, allocated $349 billion for small businesses impacted by COVID-19.

Borrowing requirements for self-employed workers and independent contractors should keep in mind:

  • You must have been in operation on February 15, 2020, your business must have been harmed by the COVID-19 pandemic and you must submit the required documentation along with your loan application.
  • You can use the loans for:
    • Replacement for your normal 1099-MISC or net self-employment income (capped at $100,000 on an annualized basis for each employee);
    • Interest on mortgage obligations incurred before February 15, 2020;
    • Rent under lease agreements in force before February 15, 2020; and
    • Utilities for which service began before February 15, 2020.
  • Payroll costs include wages, commissions, income or net earnings from self-employment, capped at $100,000 on an annualized basis for each employee.

The maximum loan size is up to 2.5 times your average monthly 1099-MISC or net self-employment income for the past 12 months. That amount is subject to a $10 million cap. If you are a seasonal or new business, you will use different applicable time periods for your calculation.

As questions or concerns arise, we ask that you contact us so we can address them as quickly as possible to ensure we continue to meet your needs. As a reminder, you can always monitor our COVID-19 Updates webpage by clicking here for the latest or monitoring our accounts on LinkedIn, Twitter or Facebook.

About Ericksen Krentel

Ericksen Krentel CPAs and Consultants, founded in New Orleans, Louisiana in 1960 with offices in New Orleans and Mandeville, believes that serving as the clients’ most trusted adviser is grounded in going beyond the numbers.

That includes helping clients achieve their business and personal financial goals by providing innovative and exceptional services in the following areas: audit and assurance services, tax compliance and planning, outsourced CFO services and business valuations for a variety of industries; employee benefit plan audits; fraud and forensic accounting; business planning; IT consulting; loss calculations; and estate planning.

Learn more at

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