By Cary Zimmerman

The federal government initially authorized up to $349 billion of relief under the CARES Act through the new Paycheck Protection Program (PPP) loan program from the Small Business Administration (SBA). More recently, there is an initiative underway to add another $250 billion to the program to respond to concerns that the initial authorization is insufficient to meet the demand of the tens of millions of small businesses nationwide needing financial assistance. Congress is working on authorizing those additional funds now, with a vote on the issue in the Senate today failing to achieve the unanimous vote required. Note that we will provide updates on whether additional funding is authorized by Congress in the coming days and weeks.

Last Friday, April 3, the PPP loan application process opened to small businesses and sole proprietorships. The process overwhelmed many banks who were racing to stand up new PPP divisions within their organizations in record time. Over the past week or so, a number of banks have gotten up to speed and to date, small businesses have been approved for several billions of dollars of loans. Many borrowers are still submitting applications and, for those with approvals, awaiting disbursements.

Tomorrow, April 10, the application process will open up to independent contractors and self-employed individuals. Below is guidance for any such applicants for PPP loans.


Anyone who operates as an independent contractor or self-employed individual that was in operation on February 15, 2020 is eligible to apply. “Independent contractor” is not defined but it is expected to apply to anyone who is paid as reflected in a Form 1099. The CARES Act defines “eligible self-employed individual” as an individual who regularly carries on any trade or business within the meaning of section 1402 of the Internal Revenue Code and is subject to self-employment tax.


The PPP loan program offers forgivable loans of up to 2.5 times your average monthly “payroll costs” (with a cutoff at $100,000 per year for cash compensation), with any carryover balances being subject to a 1.0% annual interest rate for a two-year term, with no personal guaranty or collateral requirements and payment deferral for at least six months. More details about the loans are available here.

While Treasury has published the application form to be used by small businesses, no parallel application form has been released for independent contractors and self-employed individuals. We expect the applications to be similar, however, so review the small business form to get acquainted with what disclosures and certifications are required. Also, consult with your bank or an authorized PPP lender as soon as possible to understand their particular process. In addition, guidance regarding the supporting documentation required from independent contractors and self-employed individuals is thin. However, the Interim Final Rule published by the SBA effective April 2, 2020 states that persons should “submit such documentation as is necessary to establish eligibility such as payroll processor records, payroll tax filings, or Form 1099-MISC…For borrowers that do not have any such documentation, the borrower must provide other supporting documentation, such as bank records, sufficient to demonstrate the qualifying payroll amount.”


Starting Friday, April 10, 2020.


Through any existing SBA lender or any federally insured depository institution, federally insured credit union or Farm Credit System institution that is participating. Other regulated lenders will be available to make these loans once they are approved and enrolled in the program. If you have an established relationship with a bank, reach out to them now to inquire about their PPP application process. If you are seeking a lender that is approved to lend under the PPP program, see this list of the SBA’s 100 most active lenders.

Please reach out to Cary Zimmerman at or 216.736.7275 or Kevin T. O’Connor at or 216.736.7213 with any questions you have about the PPP loan or other SBA loan programs.