The folks you call employees but to whom you issue a 1099 aren’t employees. They are independent contractors. Accordingly, the amounts you paid them in 2019 don’t “justify” PPP loan funding. You may however be able to get PPP loan funding for your W-2 earnings or self-employment income.

Example: You make $60K in wages or self-employment earnings. You also pay $180,000 to 1099 contractors.

In this case, only the $60k you receive counts as payroll costs. That’s $5K a month. Your PPP loan can be $12,500.

BTW, the 1099 contractors? They can get their own PPP loans based on the self-employment earnings their Schedule C forms show.

Say a partnership has employees ( their payroll costs are in the application ), and three active general partners: one with 79%, another with 16% and the last with 5 %. The pship nets $ 240,000 for 2019, and that self-employment income is divvied up by the percentages. Does the $ 100,000 cap apply at each partner’s level, or does it apply to the pship’s total $ 240,000 ? Look at III ( 1 ) ( a ) in the 4/14/20 Additional Eligibility Criteria release Interim Final Rule . It’s not clearly stated there which way it goes, but all other $ 100,000 caps where an employee, sole proprietor or self-employed are involved state it on a per person basis. . The bank is insisting it is on the partnership basis, not by individual partner, as we presented it in the app. I can understand the potential complexities created by ” how many bites at the $ 100,000 apple does the individual get through how many entities “, and the burden imposed in disclosing it ( and SBA digesting it ) on multiple entity apps where that partner may have income. May have to take the ” cowardly ” approach as you mentioned in a prior posted response, which was echoed in a recent webcast I listened in on last Wednesday. However, we are trying to get the bank to show its card on this tomorrow. I have this same issue on another general pship , husband and wife 50/50, with SE income where the wife has W-2 income from two corps totaling over the $ 100,000 cap, but husband has no W-2 income. SBA funded both of those corp apps, submitted at same time, and the ownership affiliation schedules were enclosed. We don’t know what the future holds, if anything, for SBA review after the forgiveness stage is past and loan has been adjusted.

I think you’re out of luck. Sorry. You get one bite at the apple.

If it makes you feel any better, know that most of your small business friends (like 97% of them) got zero.

Unbeknownst to me, on April 14, the SBA released reversed course and said that partnership draws were also eligible to be included in the loss amount. Given that we were already funded for our one employee, how do we go back and get the extra loan amount for partner draws? We would qualify for another $42,000.

When we got the initial loan we represented we would not apply for additional PPP loans in the future and even if we were to apply again we would have to certify that we had not previously received a PPP loan.

Are we just out of luck on this?

No, sorry. With no Schedule C profit, the PPP loan amount equals zero.

I guess so if you can meet the certification requirements. The money is probably already gone though…

No, only the employee paid payroll taxes count toward the loan amount or the forgiveness amount. Sorry if that’s not clear from the above discussion.

Agree. I updated the blog post. Now I need to look through comments.

The new guidance issued yesterday clears this up – partnerships can apply and use the partners’ last year’s K-1 income as the partner’s payroll.