d. How can PPP loans be used by individuals with income from self-employment who file a 2019 Form 1040, Schedule C? PPP 1. Individuals With Self-Employment Income Who File a Form 1040, Schedule C
PPP 1. Individuals With Self-Employment Income Who File a Form 1040, Schedule C
Effective Date: This rule is effective April 20, 2020.
d. How can PPP loans be used by individuals with income from self-employment who file a 2019 Form 1040, Schedule C?
The proceeds of a PPP loan are to be used for the following.
i. Owner compensation replacement, calculated based on 2019 net profit as described in Paragraph 1.b. above.
ii. Employee payroll costs (as defined in the First PPP Interim Final Rule) for employees whose principal place of residence is in the United States, if you have employees.
iii. Mortgage interest payments (but not mortgage prepayments or principal payments) on any business mortgage obligation on real or personal property (e.g., the interest on your mortgage for the warehouse you purchased to store business equipment or the interest on an auto loan for a vehicle you use to perform your business), business rent payments (e.g., the warehouse where you store business equipment or the vehicle you use to perform your business), and business utility payments (e.g., the cost of electricity in the warehouse you rent or gas you use driving your business vehicle). You must have claimed or be entitled to claim a deduction for such expenses on your 2019 Form 1040 Schedule C for them to be a permissible use during the eight-week period following the first disbursement of the loan (the “covered period”). For example, if you did not claim or are not entitled to claim utilities expenses on your 2019 Form 1040 Schedule C, you cannot use the proceeds for utilities during the covered period.
iv. Interest payments on any other debt obligations that were incurred before February 15, 2020 (such amounts are not eligible for PPP loan forgiveness).
v. Refinancing an SBA EIDL loan made between January 31, 2020 and April 3, 2020 (maturity will be reset to PPP's maturity of two years). If you received an SBA EIDL loan from January 31, 2020 through April 3, 2020, you can apply for a PPP loan. If your EIDL loan was not used for payroll costs, it does not affect your eligibility for a PPP loan. If your EIDL loan was used for payroll costs, your PPP loan must be used to refinance your EIDL loan. Proceeds from any advance up to $10,000 on the EIDL loan will be deducted from the loan forgiveness amount on the PPP loan.
The Administrator, in consultation with the Secretary, determined that it is appropriate to limit self-employed individuals' (who file a Form 1040 Schedule C) use of loan proceeds to those types of allowable uses for which the borrower made expenditures in 2019. The Administrator has determined that this limitation on self-employed individuals who file a Form 1040 Schedule C is consistent with the borrower certification required by the Act; specifically, that the PPP loan is necessary “to support the ongoing operations” of the borrower. The Administrator and the Secretary thus believe that this limitation is consistent with the structure of the Act to maintain existing operations and payroll and not for business expansion. This limitation on the use of PPP loan proceeds will also help to ensure that the finite appropriations available for these loans are directed toward maintaining existing operations and payroll, as each loan that is made depletes the appropriation. Finally, although the Act makes businesses in operation on February 15, 2020 eligible for PPP loans, the Administrator, in consultation with the Secretary, has determined that self-employed individuals will need to rely on their 2019 Form 1040 Schedule C, which provides verifiable documentation on expenses between January 1, 2019 and December 31, 2019. For individuals with income from self-employment from 2019 for which they have filed or will file a 2019 Form 1040 Schedule C, expenses incurred between January 1, 2020 and February 14, 2020 may not be considered because of the lack of verifiable documentation on expenses in this period. SBA will issue additional guidance for those individuals with self-employment income who: (i) Were not in operation in 2019 but who were in operation on February 15, 2020, and (ii) will file a Form 1040 Schedule C for 2020.
Comment Date: Comments must be received on or before May 20, 2020.
To submit your comment on this topic here: SBA-2020-0020-0001
FAQ Research based learning
"Providing resource supported answers."
Do you understand the PPP forgiveness requirements?
What is the maturity date of a PPP loan?
PPP Loan Forgiveness Calculation
Is the Unemployment grant EIDL advance a duplication of benefits for the Paycheck Protection Program?
PPP Forgiveness Application SBA and Treasury Release Paycheck Protection Program Loan Forgiveness Application.
Paycheck Protection Program PPP Questions and Answers for a Select few. Published 4-28-2020
PPP Topic; TIPS FOR SUBMITTING EFFECTIVE COMMENTS ON FEDERAL REGULATIONS. And your list of Paycheck Protection Program rules you might want to voice your opinion over.
Can I us my US Treasury and SBA PPP loan with my SBA EDIL without merging the two loans as it shows in the borrowers form?
EIDL: Do landlords with no employees, not LLC, file 1040, Schedule E, qualify for EIDL loan and advance?
KHwy Full Reno Everything
Social Media
Trade Contractors Wanted!
We are looking for Skilled Trade Contractors for remodeling, repair, reconstruction and new construction of residential homes. You must be willing to work at 20% overhead / commission. Contact us today!.
Recent Posts

American Rescue Plan Act Duplication of Benefits concerns and alerts
- Thu. Apr. 8, 2021
- /
- 76

American Rescue Plan Act of 2021 SEC. 3201. EMERGENCY RENTAL ASSISTANCE.
- Sun. Mar. 28, 2021
- /
- 157

American Rescue Plan Act of 2021 SEC. 5002. TARGETED EIDL ADVANCE.
- Sun. Mar. 28, 2021
- /
- 107