Beginning today, April 10, 2020, Sole Proprietors and Independent Contractors can apply for Paycheck Protection Program funds.  Here’s what you need to know:

1. You can apply for 2.5 times your average monthly payroll costs. Payroll costs for sole proprietors and independent contractors are compensation or income that is wage, commission, income, net earnings from self-employment, or similar compensation.
2. Can I qualify for the Paycheck Protection Program even if I don’t have employees?
   Yes. Many sole-proprietors don’t have employees.  You can qualify if you’ve been receiving fewer checks from clients and have fewer earnings than you did prior to the global pandemic.
   
3. How do you calculate that number?
   Businesses with employees:  Take net self-employment earnings, add employee wages, employer health costs for employees, and employer retirement plan contributions for employees.  Take that number and divide by 12 to get your average monthly payroll cost. Then multiply by 2.5.
   Businesses without Employees: Take the net self-employment, and divide by 12 months to get your average monthly payroll cost.  Then multiply by 2.5.
   Employee wages and self-employment income is capped at $100,000 on an annualized basis for each person.  Be prepared with calculations from 2019 numbers as well as numbers from the last twelve months as different lenders are requesting different time frames.
4. Documentation to attach to the application:
   a. Your 2019 tax return, including Schedule C and/or Schedule 1. If you have not filed for 2019 yet, attach 2019 financial statements and 2018 return.
   b. Your 2019 Form 1099-MISC.
   c. 2019 payroll tax forms 940/941 Income and expense report.
5. How do I get the loan forgiven?
   a. Spend at least 75% on payroll costs.  This program is designed to keep people employed.  Your forgiveness amount will be reduced if you don’t follow the guidelines for keeping people employed.
   b. The remaining 25% may be spent on nonpayroll costs such as rent, utilities, and mortgage interest.
   c. Expenditures must take place within 8 weeks of receiving the loan proceeds.
   d. Don’t comingle these funds with other business funds Document each expenditure so you can prove it’s going to a qualified expense.