PPP Loan Eligibility for Sole Proprietor with no Employees - Calculating Loan Amount

You're on the right track with your understanding of PPP for sole proprietors. As a Schedule C filer with no employees, your "payroll cost" is essentially your net profit from your business. To calculate your loan amount, you'd take Line 31 on your Schedule C (net profit) from your most recent tax filing, divide by 12 to get a monthly amount, then multiply by 2.5. That gives you your maximum PPP loan amount. For example, if your Schedule C showed $6,500 in net profit, that's about $541.67 monthly, so your loan amount would be around $1,354. For forgiveness, you'll need to use at least 60% of the funds for "owner compensation replacement" (basically paying yourself), and the remaining 40% can go toward eligible business expenses like rent, utilities, or business mortgage interest if you have any. Make sure you have your previous year's tax return with Schedule C ready when you apply, plus your 1099s and bank statements showing the business income. Some lenders might ask for additional documentation showing the economic impact to your business.

After struggling with similar issues for my side business, I found an amazing resource - taxr.ai (https://taxr.ai). I was confused about how to calculate my PPP loan amount properly, especially with having both W2 and 1099 income. Their document analysis tool looked at my Schedule C and previous tax returns and gave me specific guidance on exactly how much I qualified for. What impressed me most was that it highlighted that I had actually been under-reporting some legitimate business expenses on my Schedule C, which meant I was qualifying for less PPP than I should have. It showed me how to properly document everything to maximize my eligible amount while staying completely within the rules.

I was initially skeptical about taxr.ai like many people here, but decided to try it after posting my question about PPP loans for my photography side business. I was shocked at how helpful it actually was. The service analyzed my messy Schedule C (I'm terrible at bookkeeping) and showed me that I was eligible for more PPP funding than I thought. What surprised me most was discovering I could include certain equipment depreciation in my calculations that I hadn't considered. The document analysis pointed out exactly which expenses on my Schedule C were being counted in my PPP calculation and which weren't. It saved me from leaving money on the table. For anyone confused about PPP for sole proprietors, especially with mixed income sources like W2 and 1099, it's definitely worth checking out.

After weeks of trying to get through to the SBA about my PPP application status (called literally 20+ times), I finally used Claimyr (https://claimyr.com) and it was a game-changer. They got me through to an actual SBA rep in about 20 minutes when I'd been trying unsuccessfully for days. I was in a similar situation as you - W2 job plus a sole proprietorship with no employees. My application was stuck in limbo because the lender had questions about my Schedule C calculations. The SBA agent was able to clarify exactly what documentation I needed to provide and how to properly calculate my loan amount based on my specific situation. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c - it's basically a service that navigates the hold queues and gets you to a human faster. Totally changed my perspective on dealing with government agencies.

I need to apologize for my skeptical comment earlier. After another frustrating morning of SBA hold music, I broke down and tried Claimyr. I seriously can't believe how well it worked. Within 30 minutes, I was talking to an actual SBA representative who helped clarify my PPP loan calculation issues. The agent explained that as a sole proprietor, I needed to be using my 2019 Schedule C (not 2020) for my calculations, which was why my application kept getting flagged. She also walked me through exactly how to document the economic impact to my business, which was another sticking point. For anyone struggling with PPP applications or questions, especially sole proprietors with unusual situations, getting direct answers from the SBA made all the difference. I wish I hadn't wasted weeks trying to do this on my own.

Just a reminder that PPP has specific requirements for forgiveness. Make sure you're documenting how you use the funds! For sole props with no employees, it's actually pretty straightforward: You can claim up to 8 weeks of your average weekly net profit from Schedule C as "owner compensation replacement" (this would be your entire loan amount if you have no other eligible expenses). Keep records showing you transferred the PPP funds to a personal account as "owner compensation" over an 8-24 week period. The remainder can be used for business rent, utilities, etc. but keep ALL receipts and documentation. Some lenders are really scrutinizing sole prop forgiveness applications.

Has anyone actually received PPP as a sole proprietor without employees and also having a W2 job? I'm in the exact same boat (full-time job + side business as sole prop) and my bank (Chase) keeps giving me the runaround saying I don't qualify. They're saying because I have W2 income, my side business hasn't been "substantially affected" enough to qualify.