PPP Loans for 1099 Independent Contractors


Update (1/11/21): 

The Paycheck Protection Program (PPP) allows lenders to offer low-interest loans that may be 100% forgiven in certain circumstances. Independent contractors and self-employed individuals that have been adversely impacted by the COVID-19 pandemic have been eligible to apply for these loans since April 10, 2020. The requirements are straightforward. 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.

Loan Details and Loan Forgiveness

  • 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.
  • All amounts spent on the following items during the first 8 weeks of the loan term are 100% forgivable: (a) to replace your 1099-MISC income or your net self-employment income, (b) interest on business mortgages, (c) business rent, and (d) business utilities. Due to high demand, if more than 25% of this amount is used for (b), (c) and (d), some of those expenses may not be forgivable.
  • You will have to apply for loan forgiveness separately after you have received your loan.
  • The interest rate is  fixed at 1% and the loan term is 2 years.
  • Loan payments will also be deferred for six months.
  • No collateral or personal guarantees are required.
  • Neither the government nor lenders will charge small businesses any fees for the loans.

What do I need to apply? Once you know what PPP eligible lender you will be applying with, you will need to complete the PPP loan application and submit it to your lender. Applications must be processed by June 30, 2020. If you submit a PPP loan request through SBA.com, our PPP loan agent partner will act as your loan agent to assist you with putting together your application and then submit it to a lender in their network that make be offering PPP loans at that time.

Please have the following documents ready when you apply:

  • 1099-MISC
  • Income and expense reports for 2019
  • ID Verification: color copy of a government-issued ID (front and back) for all owners listed on the application. Hint – take a picture and email it to yourself so you can easily upload it.

Where can I apply? Any existing SBA lender and any federally insured depository institution, federally insured credit union, and Farm Credit System institution is eligible to make PPP loans. Other regulated lenders may be available to make these loans if they are approved and enrolled in the program. You should consult with existing banks and lenders to see if they are participating.

When you fill out the SBA.com® 1099 PPP Loan Request form, we promptly send it electronically to our PPP Loan agent partner. Our partner will review this initial request. If they determine that you may qualify for a PPP loan, they will assist you with putting together your PPP Loan application and then submit it to a lender in their network that make be offering PPP loans at that time.

Do I need to first look for other funds before applying to this program? No. Under the CARES Act, you are not required to look for funding in other places before applying for a PPP Loan.

How long will this program last? Although the program is open until June 30, 2020, the government is encouraging borrowers to apply as quickly as possible because there is a funding cap and lenders need time to process your loan.

How many loans can I take out under this program? Only one.

What can I use these loans for?

  • Replacement for your normal 1099-MISC or net self-employment income (capped at $100,000 on an annualized basis);
  • 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.

How can I request loan forgiveness? You can submit a request to the lender that is servicing the loan after. The request will include documents that verify the number of full-time equivalent employees and pay rates, as well as the payments on eligible mortgage, lease, and utility obligations. You must certify that the documents are true and that you used the forgiveness amount to keep employees and make eligible mortgage interest, rent, and utility payments. The lender must make a decision on the forgiveness within 60 days.

Can I pay my loan earlier than 2 years? Yes. There are no prepayment penalties or fees.

Do I need to pledge any collateral for these loans? No. No collateral is required.

Do I need to personally guarantee this loan? No. There is no personal guarantee requirement. However, if the proceeds are used for fraudulent purposes, the U.S. government will pursue criminal charges against you.

What do I need to certify with my application? As part of your application, you need to certify in good faith that:

  • Current economic uncertainty makes the loan necessary to support your ongoing operations.
  • The funds will be used to retain workers and maintain payroll or to make mortgage, lease, and utility payments.
  • You have not and will not receive another loan under this program.
  • You will provide to the lender documentation that verifies the number of full-time equivalent employees on payroll and the dollar amounts of payroll costs, covered mortgage interest payments, covered rent payments, and covered utilities for the eight weeks after getting this loan.
  • Loan forgiveness will be provided for the sum of documented payroll costs, covered mortgage interest payments, covered rent payments, and covered utilities. Due to likely high subscription, it is anticipated that not more than 25% of the forgiven amount may be for non-payroll costs.
  • All the information you provided in your application and in all supporting documents and forms is true and accurate. Knowingly making a false statement to get a loan under this program is punishable by law.
  • You acknowledge that the lender will calculate the eligible loan amount using the tax documents you submitted. You affirm that the tax documents are identical to those you submitted to the IRS. And you also understand, acknowledge, and agree that the lender can share the tax information with the SBA’s authorized representatives, including authorized representatives of the SBA Office of Inspector General, for the purpose of compliance with SBA Loan Program Requirements and all SBA reviews.


Sources: SBA.gov