Major Changes to PPP Expands Eligibility for Self Employed

Big changes to the Paycheck Protection Program (PPP) will allow many self-employed and small business owners to obtain forgivable loans.

President Joe Biden announced changes to the Paycheck Protection Program (PPP) that will allow many self-employed and small business owners to obtain forgivable loans.

Self-employed & 1099 Workers can get PPP based on gross income

Self-employed / 1099 workers can now use gross income instead of net income to calculate the PPP. This will help many people get more PPP.

Self-employed and 1099 workers file a Schedule C as part of their tax return. Schedule C reports “gross income” (line 7) and “net income” (line 31). “Gross Income” is the amount you earned before expenses and “Net Income” is the amount you earned after all expenses, basically your profits.

Before this change, if you file a Schedule C, your PPP grant was approximately 20% of your net income (line 31). The new guidance allows you to get 20% of your gross income (line 7) instead.

If you are self-employed/1099 with less than $100k on line 31, and report expenses on your Schedule C (line 31 is less/lower than line 7), have a look at your line 7 of either 2019 or 2020 Schedule C – you may be eligible for a larger PPP.

If your line 31 is over $100,000 or if you don’t report expenses on your Schedule C (meaning your lines 7 and 31 are the same), then this change does not affect you at all.

The new rules only apply to PPP applications that are approved after 03/03/2021 and not retroactively to those who were already funded.

If you applied before 03/03/2021, but were not yet funded, you can ask your bank to withdraw your application from the SBA, and apply again.

See our PPP Resource Center for everything you need to know about PPP.

Note: The new rule that Schedule C filers can use gross income instead of net income, also applies to schedule C filers with employees.

Expanded Eligibility

The new guidance will remove some disqualifications that currently apply to any self-employed individual or business with a 20%+ owner with a prior conviction, student loan default/delinquency, or non-citizens.

  • A prior non-fraud felony conviction
    • Previously, a business was ineligible for PPP if it is at least 20 percent owned by an individual who has either: (1) an arrest or conviction for a felony related to financial assistance fraud within the previous five years; or (2) any other felony within the previous year.
    • The new guidance is that #2 won’t disqualify (unless the 20% owner or self-employed individual is currently incarcerated).
  • Delinquent on a federal student loan
    • Previously, the PPP was not available to any business with at least 20 percent ownership by an individual who is currently delinquent or has defaulted within the last seven years on a federal debt, including a student loan.
    • The new guidance removes the disqualification for delinquencies and defaults on student loans..
  • Non-Citizen
    • Previously, there was inconsistency for ITIN holders like Green Card holders or those in the USA on a visa
    • The new guidance ensures that those who are non-citizens, yet are lawful US residents, can apply using an ITIN.
Application Pause For Businesses with 20 or More Employees

For two weeks beginning Wednesday (02/24) at 9 am, the SBA won’t accept new applications from businesses with 20 or more employees.

If you are a business with 20 or more employees, you can apply at any time, but the application will only be submitted to the SBA after March 9th.

Watch a webinar hosted by and, on how to claim PPP loans and grants for self-employed individuals and for small businesses with a payroll.

Visit for more information.

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