1099 Recipients, Sole Proprietors, Independent Contractors Often Unaware They Qualify for PPP According to Asset Enhancement Solutions

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Feds Extend Program through August 8, Providing Second Chance to Apply

We have discovered that many people who are 1099 recipients are not aware they are eligible for a PPP loan

When the federal government extended the Paycheck Protection Program from June 30th to August 8th, it created a huge opportunity for small and some bigger businesses to obtain a PPP loan. But the biggest obstacle often may be that many of the smallest companies, and members of the “GIG Economy” do not realize they are eligible.

While 4.9 million companies obtained potentially forgivable loans through PPP, 1099 recipients, sole proprietors, and independent contractors, among those targeted by the plan, often do not know they are eligible.

About 30 million businesses meet the SBA definition of a small company, leaving many millions more, including the smallest, still eligible. PPP launched in April and was renewed with $129 billion available.

Consultants, attorneys, freelancers, contractors, barbers, gardeners, writers, even some accountants and many others did not apply because they do not have conventional payroll. Sole proprietors, 1099 recipients and independent contractors, however, do not need to have employees and have a payroll to qualify.

“We have discovered that many people who are 1099 recipients [not paid as employees] are not aware they are eligible for a PPP loan,” said Neil Seiden, president of Asset Enhancement Solutions, a financial advisory firm that arranges non-traditional financing. “They all should be eligible and are exactly who this plan is trying to help.”

AES, he said, helped more than 500 companies obtain approximately $75 million in PPP Loans , including independent contractors, 1099 recipients and sole proprietors who were initially unaware that they were eligible.

The company has helped 1099 recipients, independent contractors, businesses and non-profits obtain PPP loans in 28 states, such as New York, California, Pennsylvania, Texas, Florida, Arkansas, Minnesota, Oklahoma and many others.

Bonnie Levine, a psychotherapist paid as a 1099 employee through an organization that refers clients, did not know she qualified until AES educated her and helped her get funds.
“I was extremely happy that we were able to do this,” Levine said. “With the coronavirus, things had changed. It was appropriate that we could get a PPP Loan to help us out.”

Bob Murphy, a commercial real estate broker for Greiner-Maltz Real Estate, a 1099 employee, initially thought he would not be eligible.

“I didn’t think I qualified for it,” said Murphy, who found out through AES that he qualified and obtained a PPP Loan. “I thought you had to have employees to qualify.”

As an agent for multiple lenders, AES does not charge a fee for the assistance it provides, which includes advisory services, troubleshooting and loan processing.

In tax terms, individuals who receive non-employee compensation via Form 1099 and report this income on Schedule C of their Form 1040 U.S. individual income tax return are eligible for a PPP Loan.

“This is a big deal for small businesses, 1099 recipients and independent contractors,” Seiden said. “You do not need conventional payroll to obtain a PPP Loan.”

Sole proprietors, independent contractors, self-employed individuals, 1099 recipients and single-member LLCs, often qualify.

“All of these taxpayers are eligible for a PPP loan even if they do not have employees that are paid salaries,” Seiden continued.

Donald Levine, Bonnie Levine’s husband and administrator for her practice, said AES processed his wife’s PPP Loan when banks often focused on larger businesses.

“They worked out the formula,” Donald Levine said of AES. “They did the work very quickly. They told us we could do everything online, which was great.”

AES has helped hundreds of small businesses obtain PPP funds, providing these businesses with a lifeline at a critical time, even if banks often focused on bigger businesses.

“It’s a game changer,” said Michelle Capobianco, co-owner of The Cooking Lab, a small business in Port Washington, which obtained PPP funds with AES’ help.

For 1099 recipients, sole proprietors and independent contractors, the amount of the PPP loan is determined by the amount on Line 31 of Schedule C, a business’ profit or loss which is included in a 1040.

“Most people will have their 2019 Schedule C completed by July 15, 2020,” Seiden said. “However, you do not have to file your 2019 Tax Return and Schedule C to obtain a PPP Loan.”
You can also prepare that information in a stand-alone document even if you have not yet filed your taxes, for purposes of applying for a PPP loan.

If there is a net loss on Line 31 of your 2019 Schedule C, however, you would not be eligible for a PPP Loan.

If you are a 1099 recipient, sole proprietor, independent contractor, self-employed individual or a single-member LLC and pay salaries to employees through a W-2 and a Form 940 or Form 941, your PPP loan would be calculated differently. PPP calculations for companies that pay salaries are based on salaries up to $100,000, including, health insurance for employees, employee retirement plan contributions and state unemployment insurance taxes.

“You need to know whether you qualify,” Seiden said. “But then you need a lender to make the loan. Many banks are no longer processing PPP Loans. We specialize in figuring out whether a business or individual is eligible, for what amount and we then hold their hand throughout the process."

Asset Enhancement Solutions has made many presentations, published numerous articles and been interviewed on television, finding that the smallest businesses and many individuals are still unaware of the PPP Loan Program.

“He wanted to get the word out that people are entitled to this and nobody seemed to know about it,” Murphy said of the PPP Loan Program he found out about through an AES webinar. “It didn’t seem like a 1099 recipient like me could get funding from the government.”

Seiden said businesses are still learning they may be eligible and are reaching out for assistance in applying for a PPP Loan as the program approaches its August 8th deadline.

“More than one hundred 1099 recipients have recently reached out to us to ask if they were eligible for a PPP loan,” Seiden said. “Because others have neglected this segment of the workforce, we believe it’s important to put out the word that they often can qualify.”


Neil Seiden is the president of Asset Enhancement Solutions, assetenhancement.com, a company in Uniondale, N.Y., specializing in advising and assisting in financing. He and the company can be reached at 516-767-0100 or neil.seiden@assetenhancement.com.

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Bill Corbett
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