Paycheck protection for sole proprietor with no employees or payroll

[justagirl12]

I can apply for the PPP loan as a sole proprietor and supposedly receive 2.5 months of income which is reported on my schedule C. But, when I go to fill out the application, it stipulates at least 25% has to go toward payroll for loan forgiveness. How do you prove you applied towards payroll when you’re the sole employee and have no payroll?? 

[bar-29368]

You can't. It just means you have to pay it back as a loan rather than receiving it as a grant.

[justagirl12]

You’re incorrect. If any one here actually knows the answer please reply. 

[bar-29368]

You do realise if you read the fine print on the PP it IS a loan, right?

It only becomes a grant (ie forgiven) if you actually use it as intended - for PAYROLL protection.

In fact as a sole proprietor with NO employees (ie no payroll to protect) I doubt you even qualify. And btw, 75% had to be used for payroll, not 25%

[mcdougle4248]

---

@justagirl12 wrote:

I can apply for the PPP loan as a sole proprietor and supposedly receive 2.5 months of income which is reported on my schedule C. But, when I go to fill out the application, it stipulates at least 25% has to go toward payroll for loan forgiveness. How do you prove you applied towards payroll when you’re the sole employee and have no payroll?? 

---

https://bench.co/blog/operations/paycheck-protection-program-self-employed/ 

[insanestickerz]

I think you are applying for the wrong program.  You should probably be applying for the Economic Injury Disaster Loan, which can provide up to $10K which does not have to be repaid.  See link for both programs:

https://www.nationalfunding.com/blog/sba-paycheck-protection-program-ppp-vs-economic-injury-disaster...

[corvettestainless]

Sole Proprietor does NOT mean that you have no employees; and that loan system is not made for you.

It is for the typical 'restaurant owner' that does not have any partners, is not a listed as a corporation etc.- he is the 'sole owner (proprietor) but he DOES have employees. Wait help, kitchen help etc. Can also be a factory with 200 employees, but still owned by '1 person', sole proprietor. 

The loan is 'forgiven' if you keep paying people, even if you have no business, during this pandemic- keeping those employees out of the 'unemployment' pool, taking money from that system. 

[upgradedendmills]

This might be the worst time possible to apply for any loans. There is no upside to borrowing in a downturn.

[justagirl12]

Thanks. I read this too. But my question is, will the loan turn into a forgivable grant because I’m using it to pay myself? What I mean is, how is it forgivable when you don’t have a payroll....only pay yourself?

[justagirl12]

Yeah, I meant 75%. 

[justagirl12]

I am a sole proprietor. I have filed taxes for my business for the past 25 years as a sole proprietor.....with no employees. Myself and my business are one in the same. Whatever the biz makes is what I make. 

[corvettestainless]

You do not qualify, you have no employees. Yourself does not count. 

[justagirl12]

Okay. Then how are they making it available for independent contractors on April 10? An independent contractor has no employees either. 

[bar-29368]

Because of the way it's written, ask 50 accountants and you'll get 50 different answers.

[justagirl12]

Payroll costs

consist of compensation to employees (whose principal place of residence is the United States) in the form of salary, wages, commissions or similar compensation; cash tips or the equivalent (based on employer records of past tips or, in the absence of such records, a reasonable, good-faith employer estimate of such tips); payment for vacation, parental, family, medical or sick leave; allowance for separation or dismissal; payment for the provision of employee benefits consisting of group health care coverage, including insurance premiums and retirement; payment of state and local taxes assessed on compensation of employees;

and for an independent contractor or sole proprietor, wage, commissions, income or net earnings from self-employment or similar compensation.