Apr 22, 2020

PPP Loans for the Self-Employed: Everything You Need to Know

Since Paycheck Protection Program (PPP) applications opened for self-employed people on April 10, 2020, there have been a number of questions about how the self-employed can apply, what they need, and how to navigate loan forgiveness. We’ve put together some of the most frequently asked questions about PPP loans for the self-employed. 

How Can the Self-Employed Apply for a PPP Loan?

Self-employed individuals can apply for a PPP loan in 2 ways. You can apply through your bank if they are an approved SBA lender and accepting PPP applications. If your bank is not an approved lender or has decided not to participate in the PPP program, you can apply through a loan marketplace

What Documents Do the Self-Employed Need to Apply for a PPP Loan?

You can visit our step-by-step guide on completing the PPP application for full instructions. 

How Much Can a Self-Employed Individual Claim for Payroll Expenses?

The maximum amount for a PPP loan is 2.5 times your average monthly payroll costs. Income listed on a Schedule C in your personal tax return is the only payroll that can be used to calculate your PPP loan amount. If you’ve hired 1099 workers, they cannot be included in your PPP loan calculation and may apply for their own PPP loans. 

What Counts as a Forgivable Use for the Self-Employed?

Funds used for the following uses over the first 8 weeks of the loan term are eligible for forgiveness:

You will need to apply for forgiveness, as the loan will not be automatically forgiven. It is estimated that at least 70% of the loan will need to be used for payroll costs in order for the full amount to be forgiven. 

Will Funds Used for Rent, Utilities, and Mortgage Payments Be Forgiven?

Funds used for rent payments, utilities, and mortgage interest in the first 8 weeks of the loan term are eligible for forgiveness. Payments towards a mortgage principal are not eligible. 

Due to the high demand for PPP loans, it’s anticipated that 70% of the loan will need to be used for payroll expenses in order for the full amount to be forgiven. So if you’re hoping to have rent, utilities, and mortgage interest payments forgiven, they should total 30% or less of the forgivable amount used in the first 8 weeks of the loan. 

Do You Need to Take the Full Amount You Qualify For?

No, you may apply for a PPP loan that is smaller than the maximum you qualify for (2.5 times your monthly payroll costs). 

Is Loan Forgiveness Automatic?

No, you must apply for loan forgiveness through your lender. 

What Will Be Needed to Show The Loan Was Used for Forgivable Uses?

According to current guidance from the Treasury Department, your request for loan forgiveness must include documents that verify:

You will need to “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.” 

When Will Eligible PPP Funds Be Forgiven?

The Treasury has stipulated that the lender must make a decision on loan forgiveness within 60 days of receiving the necessary documents from the borrower. 


While every effort is made to ensure the accuracy of information when a story is published, the coronavirus pandemic and Paycheck Protection Program (PPP) have caused details to change at a rapid pace. Additional guidance from the government may change or clarify certain aspects of the forgiveness process and could result in changes to the information contained in these pages. For the most up-to-date information, please visit the COVID-19 section of our website. For more information, you can call us at (855) 853-6346. Lendio is not responsible for and provides no warranty as to the accuracy of this content. Lendio does not provide legal, accounting or tax advice. The information and services Lendio provides should not be deemed a substitute for the advice of such professionals who can better address your specific concern and situation.

About the author

Mary Kate Miller
Mary Kate Miller
Mary Kate Miller is a writer based in Chicago, IL. She specializes in covering finance (personal and business), investing, and real estate. Her mission in life is to give readers the confidence and the knowledge needed to grow their wealth by making financial topics more accessible. When she's not writing about topics like business loans, you can find her playing armchair financial advisor to the Real Housewives.


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