Can I Get a PPP Loan if I Opened My Business in 2020?

Editor’s note: On Tuesday, May 4th the PPP ran out of general funds and the SBA stopped accepting new PPP loan applications. A reserve of funds is still available for community financial institutions that lend to businesses run by women, minorities, and underserved communities. Additionally, a reserve of funds remains for applications previously submitted but not yet reviewed by the SBA. If you have already submitted your loan application, however, this does not guarantee you funding.

If you started a new business in 2020, can you still get a PPP loan? Yes: but only if you were operational on February 15, 2020.

Here’s everything you need to know about getting a PPP loan for a new business (and some alternative funding options).

Sole proprietorships and contractors

Sole proprietorships, contractors, and gig-workers are eligible for a PPP loan amount based on their net income.

Contractors in operation on February 15, 2020 can apply for the PPP using a completed Schedule C for 2020. Your Schedule C does not need to be filed, but should still be reviewed by a tax professional for accuracy and completion. 1099-MISC forms for 2020 may need to be provided as supporting documentation.

The amount you are eligible for is 2.5 times your average monthly net income. You can find this amount by taking your net income in 2020, dividing by 12 to get the average, then multiplying it by 2.5.

This loan amount can be fully forgiven over a 24-week period.


For partnerships, you are eligible for a PPP loan amount based on your payroll numbers and self-employment income. To calculate your PPP loan, use your 2020 payroll numbers and include your self-employment income as reported on each partner’s Schedule K-1. Take these totals from 2020 and divide by 12 then multiply by 2.5 to find your loan amount. Payments to contractors, and any draws or distributions are not considered payroll costs.

Further reading: PPP Loans for Partnerships: What You Need to Know

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You are eligible for a PPP loan amount based solely on your payroll numbers. Take your payroll numbers from 2020 and divide by 12 then multiply by 2.5 to find your loan amount. Payments to contractors, and any draws or distributions are not considered payroll costs.

What about the second round PPP loans?

As it stands today, the program—including the second round of funding—is still limited to businesses that were operational before February 15, 2020.

It’s unclear if the Paycheck Protection Program will be opened up to businesses that became operational after that date. In 2020, many of the other relief programs were made more widely available as time went on. It’s entirely possible relief funding will be made available to newer businesses in the future.

What resources are available to me?

If you aren’t eligible for a PPP loan, there are still funding options available to you.

Additional resources

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This post is to be used for informational purposes only and does not constitute legal, business, or tax advice. Each person should consult his or her own attorney, business advisor, or tax advisor with respect to matters referenced in this post. Bench assumes no liability for actions taken in reliance upon the information contained herein.

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