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CARES Act Paycheck Protection Program

By BanescoUSA
Published on April 2, 2020

FAQ from Small Businesses regarding The Paycheck Protection Program

  • Can you use PPP to pay 1099 contractors?


  • Is there any help for 1099 contractors and business owners? For example a realtor.

    The Payment Protection Program (PPP) applies for sole proprietors and covers 1099 employees.

  • Would the Payment Protection Program (PPP) loans allow for payments to 1099 or only W9 employees?

    Both, W2 and 1099 employees.

  • I am a massage therapist, I have an S corp. I’m the only employee and I do pay myself as an employee, but I am not sure if that is considered payroll. Will I be covered under CARES Act?

    Sole proprietors are eligible.

  • Can a two-person sole proprietorship that hires consultants for its work apply for support to keep the consultants working?

    Yes, 1099 are eligible.

  • Is the payroll covered by the loan only for full-time staff or part time and contractors too?

    All the above. As long as you can show that you paid them for the period that is required under this program.

  • Are 501(c)(3) eligible for the PPP?

    Yes. Non-profit organizations are eligible.

  • Can you apply for both PPP and EIDL and if you get approved for both can you accept both?

    Economic Injury Disaster Loans (EIDL) can be converted to PPP.

  • Since non-profits hire 1099 contractors for consulting and other services, will these contractors be included in the PPP?

    1099 are eligible.

  • Define “monthly payroll costs” in order to calculate the loan amount? Can benefits including healthcare insurance costs be included?

    • Compensation (salary, wage, commission, or similar compensation, payment of cash tip or equivalent)
    • Payment for vacation, parental, family, medical or sick leave
    • Allowance for dismissal or separation
    • Payment required for the provisions of group health care benefits, including insurance premiums
    • Payment of any retirement benefit
    • Payment of state or local tax assessed on the compensation of employees.

  • My rent is more expensive than my payroll. The program specifies 75% of the forgivable amount should apply to the loan, what would be my best approach?

    The CARES Act makes possible forgiveness for non-payroll costs in excess of 25% of total forgiveness if employees are re-hired by June 30.

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