The Paycheck Protection Program, part of the new CARES stimulus package, is a federal loan program aimed at helping small businesses, including sole proprietors, independent contractors, and eligible self-employed individuals, who have been severely impacted by COVID-19. The main objective of the loan is to help these businesses retain their workforce. As a self-employed individual, this program will provide funds to pay yourself.
The U.S. Small Business Administration issued a new interim final rule Tuesday that supplements the guidance for the Paycheck Protection Program (PPP) included in the first interim final rule for the PPP issued on April 2 and FAQs that are being updated periodically. See the Small Business Administration rules HERE on our resources page.
The additional guidance provides specific information on calculating the maximum loan amount for individuals with self-employment income who file a Form 1040, Schedule C, Profit or Loss from a Business.
The 2019 Form 1040 Schedule C is required to be provided with the PPP loan application, according to the interim rule, which notes that detailed documentation guidelines are also required. Guidance is also provided on how PPP loans may be used and how loan forgiveness will be calculated.
Self-employed individuals are defined as:

• Sole proprietors: You report income and pay taxes on a Schedule C in your personal tax return
• Independent contractors: You collect 1099-MISC forms

The SBA stated it will issue additional guidance for those individuals with self-employment income who: (1) were not in operation in 2019 but who were in operation on Feb. 15, 2020, and (2) will file a Form 1040 Schedule C for 2020.
Additionally, the new guidance directs that the self-employment income of partners in a partnership may be reported as a payroll cost, up to $100,000 annualized, on a PPP loan application filed by or on behalf of the partnership (or LLC filing taxes as a partnership). Individual partners may not submit a separate PPP loan application as a self-employed individual.
The guidance also addresses the eligibility issues of certain business concerns and requirements for certain pledges of PPP loans.
Congress created the PPP as part of the $2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act, P.L. 116-136. Under the PPP, Treasury and the SBA are offering $349 billion in forgivable loans that small businesses damaged by the COVID-19 pandemic can use to cover costs including payroll, rent, utilities, and mortgage interest.
Businesses with no more than 500 employees began applying for the loans on April 3. The application window opened April 10 for those with self-employment income who file Schedule C with their Form 1040. This includes independent contractors, gig workers, and sole proprietors, including those who have other employees.
As of the close of business on Monday, the SBA had approved $242 billion in PPP loans to 1.01 million small businesses through 4,662 approved SBA lenders, according to a tweet Tuesday from U.S. Sen. Marco Rubio, R-Fla., one of the biggest supporters of the program.
The CARES Act established the PPP as a new 7(a) loan option overseen by Treasury and backed by the SBA, which is authorized to provide a 100% guarantee to lenders on loans issued under the program. The full principal amount of the loans and any accrued interest may qualify for loan forgiveness if the borrower meets requirements related to having employees on payroll.