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PPP & Self-Employment: 6 Myths, 11 Best Reasons to Apply

If you have been in business since before February 15, 2020 as a self employed person, you may qualify for paycheck protection forgivable loans. Whether delivering for gig companies like Uber Eats, Doordash, Grubhub, and Instacart, doing rideshare like Uber and Lyft, earning money as a digital entrepreneur like bloggers, podcasters and other content creators, or other types of freelance.

However, time is running out.

The PPP, or Paycheck Protection Program loan program, was introduced to help small businesses survive the lockdown. They renewed it twice so far. As the March 31 deadline looms, Senators are considering a measure that will extend the program until May.

Empty hourglass on stack of books labeled PPP Loan Round 2, indicating time running out on the Paycheck Protection Program.

What's really striking about the PPP is it includes the self-employed. Independent Contractors, freelancers, bloggers, and other sole proprietorships are eligible. I write primarily about the business side of delivery contracting with Doordash, Grubhub, Uber Eats, Instacart and other third party platforms. 

Whether you're a gig economy contractor, a blogger or content creator, freelance writer, or some other form of sole proprietor, consider whether it makes sense. But don't wait too long.

Should you apply for PPP funding? That's a personal decision. You might feel like you don't need it, or you may make a good faith determination that you were hurt by the pandemic.

We'll look at some of the concerns people have about applying. Then we'll cover 11 reasons the Paycheck Protection Program may be for you. 

Womply has made it easier than ever for the self-employed to apply.
Apply now using Womply's Fast Lane.

Dispelling the myths that hold the self employed back from applying.

I know a lot of people think they can't or shouldn't get the PPP.

What makes them hesitant? I think the biggest issue for a lot of people is one word:

Paycheck.

We don't get paychecks as independent contractors with Doordash, Uber Eats, Instacart, or Grubhub. Bloggers, Youtubers, social media influencers and other content creators don't do payroll. 

And if it's not that, we might think we shouldn't apply. Freelancers and other self employed folks might be thinking, it's not right to request this funding. 

We’ll take a look at some of these myths first. We’ll answer them quickly in this section, and then cover some of these themes a bit more in depth when we talk about our reasons.

Bold, bright red  block letters spelling "FACTS' below a column of plain grey "MYTHS."

Myth #1. The self employed don’t do paychecks.

Before I go any further, I should point out I’m focusing on the self employed who use a schedule c in their tax returns. That covers most independent contractors and a lot of freelancers, bloggers and other sole proprietors. If you incorporated and choose to be taxed as an S Corp or C Corp, some of this may not apply.

It’s true that we don’t have payroll when we’re self employed. Money we receive for our work is the same as business income. What we spend personally that we've earned is kind of like paying ourselves, but there’s no technical paycheck. 

However, the wording in the CARES Act and in all the updates since is very consistent. In the eyes of the SBA, your income (they call it owner compensation replacement) is the same thing as payroll. The federal government sees your profits as your income, and taxes you that way. 

Myth #2. Accepting PPP funds is only taking money away from businesses who really need it.

When the Paycheck Protection Program first came out, a lot of businesses were unable to get funding. The money ran out fast. However, the government added more funds to the program mid year. Those funds had not been depleted by the August 8, 2020 deadline.

As of March 14, more than $100 million remained. That's more than a third of the funding from this round. Congress passed a measure to extend the deadline, to give businesses more time to apply. As of this writing we’re still waiting for the United States Senate to vote. 

The fact that money has lasted completely through both the second AND third rounds of funding says one thing: You applying is not costing a business any money. If they didn’t receive the funding it’s only because they haven’t applied (or weren't eligible borrowers for other reasons).

Myth #3. You have to use 40% of the money for things that most of us won’t use.

There’s a misunderstanding here. Businesses with payroll CAN use up to 40% for certain other expenses. They’re not required to. A business can choose to use the funds 100% for payroll. 

Your maximum loan amount as a self-employed person is based on one thing: average monthly income. That's our payroll. PPP forgiveness calculation is also based on that. The other expenses are not required.

Myth #4. The rules for how you use your money are complicated.

It's Complicated in black letters spelled out on multi colored pieces of paper

Don’t be confused by the rules for businesses with payroll. I admit that the reporting rules for those with multiple employees and figuring out average monthly payroll costs look a little intimidating. Some get scared that they could accidentally be committing fraud. While PPP loan fraud is a real problem, it's really only a problem when you are intentionally defrauding.

However, it’s really simple for the self employed. What was the owner’s income? 

You'll fill out a form 3508S to apply for forgiveness. It asks for one thing: How much was spent on payroll. Remember, owner compensation is payroll. When I applied for forgiveness, the only documentation they asked me for was my Schedule C.

Myth #5. This is a loan, not a grant.

In reality it’s a bit of both. The Paycheck Protection Program is a loan program. However, these are forgivable loans. Rule changes have expanded the forgiveness for independent contractors. As self employed individuals, PPP funds are fully forgivable as long as you were eligible to begin with.

Myth #6. I didn’t technically make a profit, so I can’t receive anything.

This one isn’t as much a myth as an obsolete reality. Under the original program, eligible funding was based on your taxable profits. Recent rule changes by the Biden administration has based it on your gross income. 

A lot of gig workers were originally left out in the cold. As many miles as we drive doing deliveries for Grubhub, Uber Eats, Doordash, Instacart etc, or as rideshare drivers with Uber and Lyft often had little or no taxable income. This rule change has opened the door for many that didn’t qualify before.

11 Reasons You Should Consider the PPP As a Self Employed Business Owner.

Let me be clear: I don't care if you apply or not. I have no emotion here about this.

This is your decision.

If you're reading this article though, I assume you're thinking about it. Maybe you were concerned about the myths.

If you're not sure if this is the right program for you, maybe one of the following 11 points will help you.

1. You were impacted by the pandemic.

Has this pandemic interfered with your business? That’s the real important question.

I won’t try to interpret one way or the other for you. 

I focus on gig economy business owners and contractors at EntreCourier. Delivery as an industry has boomed. A lot of drivers thrived as a result of more business and better pay.

That doesn’t mean drivers weren’t impacted. Many were at risk or had loved ones at risk. They felt it safer to sit out for a time. 

Others found more competition for orders. A lot of new drivers entered the gig economy to help earnings when their employment situation changed. The delivery platforms saturated the market with drivers to make sure they can keep up with demand. Many couriers found that business has slowed for them individually even though Doordash, Instacart, Uber Eats, Grubhub etc have boomed.

Doordash, Instacart, and Uber Eats may have been busier but some couriers found that business slowed.

As a blogger I see both situations. I chose to sit out a significant part of the time as a delivery driver, but that allowed me to work on my blog. Many food bloggers saw traffic explode as people were cooking at home more often. Travel bloggers took a beating.

You have to make that decision yourself. What has this past year done to you? 

2. You are concerned about being impacted later.

We're not out of the woods necessarily. That light at the end of the tunnel could be an oncoming train.

Had enough of the metaphors?

We don’t know what’s going to happen as we move out of this. I’ll choose optimism here, that I do think there’s room for optimism. 

That said, I know I expected us to come out of this far sooner than we have, so who knows?

What happens when people are getting out more and deliveries are happening less? Especially if the job market doesn’t thaw so quickly and all those people who migrated to gig work are still on the platform? Fewer deliveries but an army of couriers can be a problem.

If things are humming now for you, do you know they will be? The PPP can serve as a hedge fund for you. Set it aside, see what happens. If you didn’t need it, you can give it back rather than apply for forgiveness. The good news is there is no prepayment penalty.

3. You qualify

You seriously do qualify. Congress intentionally included you and other self employed individuals. The survival of entrepreneurs, small businesses, independent contractors and freelancers is important to the recovery of this economy.

We ARE small business owners. We may not feel like it. However, we pay taxes as a business owner.

To be clear, you qualify if you qualify. How's that for confusing? What I mean is, if you started your business before February 15, 2020, that's the main qualifier.

Having said that, recent rule changes have opened the doors to a lot of people who previously didn’t qualify. If you were left out due to student loan issues, you now are eligible. If you didn’t have a Social Security Number but only an ITIN, you now qualify. Certain felonies no longer disqualify you. 

4. The government WANTS you to apply.

Uncle Sam wearing a mask pointing with caption "I want YOU to apply for PPP."

When the latest version of the PPP was being rolled out, SBA acting Associate Administrator Bill Briggs appeared in an interview with Max Maher and Womply CEO Toby Scammel. Briggs was in charge of the implementation of the Paycheck Protection Program. 

Bill spoke in very clear terms: They WANT contractors to apply. At the 12:20 point he stated “

you should definitely apply when in doubt. Do not talk yourself out of it.

Bill Briggs of the SBA at 12:20 in the interview.

We really want to make sure that as many people as possible are benefitting from these programs to get through these unfortunate times.

Bill Briggs of the SBA at 25:00 in the interview

Between his words and government actions since, it’s obvious they want to get this to as many people as possible. The SBA even created a two week time period dedicated to very small businesses and sole proprietors. 

5. The funds are available. 

This is part of why the government is voting on extending the deadline. Nearly a third of the allocated loan funds remain. Congress allocated enough money to make sure they could get funding to whoever qualifies.

I’m pretty sure funds will remain for awhile even if the deadline is moved to May 31. I remember thinking funds would run out during the second round of funding. However, by mid July most of the larger companies that would be taking the loans out had applied, so the remaining funds lasted all the way through the deadline.

6. It won’t last forever

As I publish this, it’s March 24. There’s only a week left. If the Senate does approve the extension, which seems likely, that still only pushes the window out to May 31. 

I don’t expect to see a third round of the Paycheck Protection Program. If there is something else, I’m guessing it’s something that will be some new version, or maybe something that opens it up to those who started their business after the February 2020 date.

I admit hoping we don’t see another round. Not that I don’t want there to be funding. Getting another large piece of funding through isn’t going to be easy, and will only happen if things are getting bad. I hope we don’t get to where we need it.

The thing is, you don’t want to wait until the deadline. It’s very possible that if the application hasn’t been processed by the deadline, you may not be approved. As I talk to people, I’m hearing that it’s taking a few days to get to signing the application.

7. You are probably eligible for more.

When the original version of the Paycheck Protection Program was introduced, funding was based on 2.5 times the average monthly net profit. In other words, the amount left over after expenses. 

For gig workers that drive a lot, 57.5¢ per mile as a tax deduction is awesome for our tax returns. That reduction in income is devastating regarding the loan amount.

A recent interim rule changed that. You now qualify based on gross receipts. In other words, it’s 2.5 times the amount of revenue that we received. Expenses no longer reduce the that you can receive.

8. The loan forgiveness process is easy.

Here’s what it boils down to for self employed individuals: They calculate your loan forgiveness the same way they calculated what you can receive. It’s based on 2.5 months of your past earnings. 

The SBA has introduced a simplified loan forgiveness application for independent contractors, self employed individuals and sole proprietors. The main thing you have to do is remember to apply.

Originally, sole proprietors could only apply for forgiveness based on average weekly earnings for an eight-week period. However, one provision of the Paycheck Protection Program Flexibility Act expanded that to allow full forgiveness.

9. Womply has made the application easy

Road sign saying Fast Lane and arrow pointing left indicating new Womply PPP Fast Lane application.

Womply has created a Fast Lane application. The whole thing is designed to streamline the process for you.

Prior to the Fast Lane, you had to find a ppp lender, then apply through them. I personally applied through Womply’s portal, and have been pointing visitors to that portal for awhile. 

The way it worked with them was that you provided your information. Womply would then search through a number of financial institutions to find a match for you. Then you apply through that lender. 

In fact, I started my application with one lender. They informed me they could not do my application at the time. They were so overwhelmed with applications they couldn't keep up. I had to go back and find someone else.

Now, to streamline things, you start the application with Womply’s Fast Lane. You provide the details, fill out the application form. They have you upload your documentation. 

Then Womply handles it from there. They line up the lender and submit your information on your behalf. It simplifies the process tremendously. 

I appreciate that it is designed for independent contractors. It makes it easier for an independent contractor, a freelancer, blogger, gig worker or any other type of self employed individual. You may have noticed there are a lot of things that rules and criteria are very different for us than for a business with a number of employees. 

The Fast Lane by design focuses on the things related to self employed individuals. 

Essentially, the Fast Lane speeds up the application (usually about 5 minutes), and then Womply does the leg work of getting you started with the lender. The lender only comes into the picture to follow up on documentation or errors, and to sign your loan.

10. You may be able to take a first AND second ppp loan.

The government added a second PPP loan option with the December reintroduction.

Those who received their first draw ppp loans in 2020 had an opportunity to qualify for a second round of loan proceeds

However, the second draw ppp loan had one more qualifier. You had to have a significant drop of income for at least one quarter in 2020 compared to the same quarter the previous year to qualify for new funding. 

In other words, if you could demonstrate that the pandemic really did impact your business, you could take a round of additional funding.

Part of Womply’s Fast Lane application is them working on your behalf to try to get you funded for the second round of PPP funding as quickly as possible after the first round. 

11. Repayment terms are unbeatable. 

Text saying Low Interest Rates on PPP. To the right are a calculator and a clock indicating time is running out, on top of various types of currency.

Repayment? I thought the loan was forgivable.

Sometimes the SBA can deny loan forgiveness. That won't happen much based on how simply they determine loan forgiveness for the self-employed. Usually it has to do with multi-employee businesses that couldn’t document enough payroll expenses or other eligible expenses in the covered period to meet the loan amount. In that situation the forgiven amount may be less than the loan proceeds.

For a self employed person to not get the loan forgiven it’s usually because of one of two things:

They weren’t eligible to begin with. The SBA possibly discovered a disqualifying factor after funding. They can ask for a lot of documentation during the forgiveness application. An example is proof that you had a drop of income for a second draw loan. A lack of documentation results in forgiveness being denied.

Sometimes it’s just because someone didn’t apply. Maybe someone makes a conscious decision not to apply for ppp loan forgiveness. They decide they didn’t really need the funds.

In either case, the repayment terms are about as good as they can get. It’s a 1% interest rate over a five year term. 

I know mortgage interest rates are getting crazy low. However, 1% is about as good as it gets for interest rates.

Payments are deferred until forgiveness is applied or until the forgiveness deadline. Businesses have ten months to apply for forgiveness under the latest rules. In other words, you can wait as much as ten months before you have to start making payments. 

Is the Paycheck Protection Program for you as a gig economy contractor, blogger or content creator, freelancer or other self employed individual?

Maybe you didn't feel an impact on your business. If you decide you aren't comfortable taking the funds, I understand.

If you’ve been holding off because you just fear you can’t get it or you believe the myths, don’t hold back.

As Bill Briggs from the U.S. Small Business Administration said: “You should definitely apply when in doubt. Do not talk yourself out of it.”

When the PPP was first introduced, at the time a lot of details for independent contractors were quite fuzzy. They hadn’t come out with the details of how they would calculate loan forgiveness. 

I wasn’t interested in adding a debt. I commented then that if I applied, I would just put the money aside until I knew more about how forgiveness worked. If any of it wasn’t forgiven, they could just have it right back. 

Sponsored: Apply now for the Paycheck Protection Program through Womply's Fast Lane.

Things have cleared up tremendously since then. Usually the only thing that keeps the funds from being forgiven are if you never qualified in the first place. As you go through the ppp loan application process, there’s a series of questions. It’s pretty clear, in my experience, whether you have anything to worry about.

Has this impacted you and how you do business? Is the PPP something that can help your business and ensure its economic security for ongoing operations through the aftermath? Only you can answer those questions.

But you better decide the answer to those questions soon. Don’t wait.

Could this help someone else? Please share it.