Are borrowers able to include payments made to independent contractors in calculations of payroll costs?
Although previous versions of this question stated yes, as of April 10 2020 the answer is ‘No.’
Any amounts that an applicant has paid to an independent contractor or sole proprietor should be excluded from the eligible business’ payroll costs.
It is important to note that the independent contractor (1099) and or the sole proprietor can be eligible themselves for a PPP loan if it meets the application requirements.
Linked here and pasted below is the text from the official question and answer document published by the Department of the Treasury on April 10, 2020, which you should reference:
Below is the official question from Q15 as of April 10, 2020
15. Question: Should payments that an eligible borrower made to an independent contractor or sole proprietor be included in calculations of the eligible borrower’s payroll costs?
Below is the official answer from Q15 as of April 10, 2020
Answer: No. Any amounts that an eligible borrower has paid to an independent contractor or sole proprietor should be excluded from the eligible business’s payroll costs. However, an independent contractor or sole proprietor will itself be eligible for a loan under the PPP, if it satisfies the applicable requirements.
You just learned about:
Contractors Included Payroll Calculations PPP For more information, check out this related resource:
Funding a Business
Do you have a topic suggestion?
We are working rapidly to update our resources and content.
Send feedback to let us know!