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The CARES Act Frequently Asked Questions

Formations Team

23 Apr
There's so much information on the CARES Act, and yet, so much confusion! In our mission to help the self employed, we gathered some of the frequently asked questions and its answers
Formations S-Corp Self-Employed

In our dedication to providing you with all the help and service we can during this health crisis, we have gathered some FAQ we hear from our customers and webinars attendees about the CARES Act.

  • If I already applied for the Paycheck Protection Program (PPP), but haven’t heard back, should I file again?  
    Yes! Just because your preferred lender denied your application does not mean you are not qualified to apply elsewhere. The exception would be if the application was denied because you don’t meet the standards set down by the CARES Act (such as not being in business between 2019 and 2/15/2020, or being an s-corp with no payroll during 2019, etc.) 
  • If I don’t pay myself in payroll, do I qualify? I just received a 1099 commission.  
    Yes, self-employed individuals filing on Schedule C of their 1040’s are eligible to receive PPP loans. However, because they do not have payroll expenses it is much more difficult to get the loans forgiven because the only qualified expenses they have are mortgage interest, rent, and utilities. 
  • I am an S Corp, and my 1099 Misc is paid through my Corp. Do I qualify?  
    Yes, provided you paid yourself wages in 2019 from the S corp. If you have a W2 in your name from your company then you qualify. 
  • My bank states they are not taking any new applications now. What do I do?  
    There are lots of banks/lenders still taking applications and considering new clients, such as Washington Trust Bank, Columbia Bank, Fundera, Lendio, Kabbage, Intuit, etc. I would try all sources you can find. 
  • I’m an independent contractor, can I apply for both PPP and EIDL? What about PUA and unemployment?  
    You can apply for both PPP and EIDL (bear in mind you will need to use them for different expenses; PPP for payroll-related expenses and EIDL for all other expenses). You can also apply for unemployment with your state unemployment office; the Feds have authorized more unemployment funding for gig economy and self-employed people to draw on, but it needs to go through your state office. 
  • If my line 31 net income is $ 33,465 – how much can I apply for? 
    33465/12 = 2788.75 for your monthly average income, 
    2788.75*2.5 = 6971.88 would be the maximum loan you qualify for. 
  • I’m a realtor, have closed some escrows earlier in the year, but not sure what will happen with the current market. How is it possible to apply to unemployment not knowing what my income will be, or not be in the future? This is such an unknown week by week. I do qualify now, but I worry if I close some escrows I will not qualify. If I do qualify now, and that changes, not sure if that’s still OK to apply?  
    If you’re a realtor who is self-employed you will likely only qualify for the $600 per week federal stimulus amount via your state office and it will not be dependent on your previous income. Applying for standard unemployment is always a “look back” situation on your income.
    You can find additional information on the WA ESD page including how to file and what to expect. 
  • How can I prove that I was operational before 2/15/2020?  
    Your state business license, previous year Schedule C from your 1040, payroll documentation, 1120S, financial statements from your bookkeeping, all of these are valid documents to provide proof of operation. But you should confer with your lender or the SBA to see what they would prefer to have. 
  • Do I need to file my 2019 taxes before applying for the CARES Act?  
    Not necessarily, but it’s very helpful to do so as it gives solid proof of your net income if you’re a sole-proprietor or an S corp. At the very least you should provide a draft of the return if it’s not filed yet. Again with the PPP, it will be up to individual lenders to decide how stringent their policies will be. 
  • Can I use my 2018 taxes if my 2019 taxes has not been filed yet?  
  • As a self-employed, with no employees, will the loan be eligible for forgiveness?  
    Partially; because you don’t have any payroll-related expenses to use it will be limited to using mortgage interest, rent, and utilities as the only qualified expenses to submit for forgiveness.  
  • Will the loans or grants be claimed as income for 2020 taxes?  
    No; neither the EIDL advance nor any forgiven PPP loans can be claimed as income and taxed on your 2020 taxes. Make sure you communicate with your tax preparer to ensure these amounts are not included in your taxable income. 
  • What information will I need to supply to forgive the loan?  
    Much the same information as you would have had to supply to receive the loan will need to be provided, such as paystubs, payroll summaries, 941 for the period during the loan, Income Statement for the 8 weeks after you receive the loan funds. Ask for a checklist from your lender specifically as it may change from lender to lender. 
  • Will there be further small business stimulus coming from federal/state agencies?  
    Yes; the US Senate passed a bill on Tuesday the 23rd with the House of Representatives set to vote on it Thursday. Barring some sort of political wrangling to delay it is expected to pass and go to the President for signature. The bill includes an additional $380 billion for the PPP and $60 billion for additional SBA loans (as of current information) and we spoke to the SBA directly this week and they expect to start accepting more applications for EIDL loans around 1st of May. In addition there may be even more legislation later this year that will depend on the evolving situation around the unemployment figures and health crisis.  

If you would like our assistance in clarifying what you are eligible for, and what’s available to you from the CARES Act programs, do not hesitate to reach out to us!



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