PPP For Owner Operators / 1099s

Coronavirus (COVID-19) Resource Center > Payroll Protection Program (PPP) > PPP For Owner Operators / 1099s


Recently, the Payroll Protection Program was expanded to include 1099 workers. This means that owner operators and independent contractors now have access to forgivable loans under PPP.

Payroll Protection Program (PPP)

Under the CARES Act independent contractors who collect 1099-MISC forms can apply for the PPP loan. This Program is a first come first serve, so it is EXTREMELY Important you apply before the funds run out.

How to Calculate Loan Amount?

  • 2.5x Your Average Monthly Net Income
  • Independent contractors will use their 2019 Net Income.
  • Add together all the 1099-MISC forms you received from employers throughout the year (Line 31 of your 2019 Schedule C for the full amount)
  • Net income is capped at $100,000 annualized. (Max monthly average of $8,333.33)

How is Loan Forgiven?

  • Use at least 75% of it to replace your 1099-MISC income or net self-employment income
  • 25% can go to paying other obligations
    • Rent
    • Vehicle Storage
    • Mortgage Interest
    • Utilities
    • All funds must best used within 8 weeks of receiving them

How to Apply:

  • Apply at the bank you have your checking account with.

What Happens if I use the funds in another way?

  • If the loan is used for other expenses than a percentage of the loan will not be forgiven.
  • Any portion not forgiven must be repaid within 2 years and has a 1% interest rate.
  • All payments are deferred for 6 months.

Keep in Mind:

  • You will be asked to keep track of the expenses you paid with the funds.
  • You are eligible to use both the EIDL and a Payroll Protection Program (PPP) loan, but you cannot use both loans to pay for the same expense.

Additional Resources:

Check out our PPP checklist of all the documents that an SBA lender will likely ask of you when applying.