What You Need to Know About PPP Loans for Gig Workers and Freelancers

Jennifer Geer

If you're self-employed, you may qualify for a forgivable covid-relief small business loan


Image by Shutterbug75 from Pixabay

In 2020, the first round of relief funding provided support to small businesses, (including independent contractors) impacted by Covid-19. As a freelance writer, I would have been eligible for this first round, but I didn’t realize it until it was too late.

I wasn’t the only one. Although businesses with less than 20 employees account for 98% of American small businesses, they collected only 45% of the funds.

The second round, announced by President Biden on February 22, has been upgraded to help the smallest of businesses. The good news for the gig economy: This includes freelancers. And more good news, these loans are forgivable.

Full disclaimer: I am not a financial expert. Not even close. I have, however, done a considerable amount of research on the second round of government PPP loans, and I’m happy to share with you what I’ve learned.

Are independent contractors with multiple jobs eligible?

Yes. If you have a 1099 income, you are eligible.

This list includes:

  • Freelancers
  • Writers
  • Uber drivers
  • Farmers
  • Gig workers
  • Truckers
  • Content creators
  • Online stores
  • Airbnb owners

What if I have a regular job where I get a W-2, but I freelance on the side?

You can still apply. Again, as long as you have earnings on a 1099 form, even if it is in addition to a W-2 from a regular job, you’re eligible.

Can I get a second draw if I took out the first one?

Yes. But you have to prove that you earned 25% less in 2020 than you did in 2019.

Can I apply if I just started my business?

You must have started your business before February 15, 2020. If you started your gig job after that date, you’re not eligible.

How do self-contractors calculate their loan amounts?

  1. Use the amount from your taxes on your 2019 or 2020 IRS Form 1040 Schedule C line 7 gross profit. This was recently updated from using line 31 of net income. You can use whichever year you made the most money, but the maximum is capped at $100,000. If it is zero or less, you are not eligible.
  2. Divide your line 7 net profit amount by 12 (this gives you your monthly profit.)
  3. Take your monthly profit and multiply it by 2.5. This is the amount you can take out.


A freelancer has a gross profit of $30,000 (as reported on IRS Form 1040 Schedule C, line 7)

30,000 divided by 12 = 2,500

2,500 times 2.5 = 6,250

A freelancer earning $30,000 per year from their business can apply for a loan at a maximum of $6,250.

How do I get the loan forgiven?

For your loan to be forgiven, you must use at least 60% of the money on your payroll for employees. If you are self-employed with no employees, your payroll is what you pay yourself.

Once your loan is approved, check with your lender for the appropriate forms to fill out for loan forgiveness. You must apply for it. Otherwise, you will be responsible for paying back the loan.

How can freelancers and gig workers find lenders?

This is where small business owners and independent contractors ran into snags the first time around. Some lenders will only lend to businesses they already have relationships with. Some will only lend to business owners, and won’t do smaller loans for gig workers.

This is not an inclusive list and I have no affiliation with these lenders, but here are a few I found during my research that will do business with self-contractors:

Will applying for a loan impact my credit score?

It shouldn’t. Check with your lender before you apply to be certain.

What is the deadline for applying?

Applications are accepted through March 31, 2021.

What are the loan details?

  • 1% interest rate
  • 5-year maturity (for loans issued after June 5, 2020)
  • Loans are forgiven if the money is used for at least 60% of payroll costs (if you’re self-employed, it’s money you pay yourself)

What documents will you need to provide?

You’ll have to check with your lender, but some of the supporting information you may need can include:

  • Bank statements
  • A copy of your driver’s license
  • Tax returns
  • 1099 forms
  • Voided check

Yes, getting a PPP loan does involve a bit of paperwork and gathering up of documents, but don’t let that throw you off from getting some much-needed economic relief.

This article is accurate to the best of my ability, but as I said in the beginning, I am not a financial advisor. Check with the government websites and/or your lender for details. And good luck!

Websites for more information:

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Jennifer covers lifestyle content and local news for the Chicago area.

Chicago, IL

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