How to Pay Yourself PPP Loan SELF EMPLOYED

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Here’s how to pay your PPP loan money, if you’re self employed. The goal is to create crystal clear documentation showing how you used these forgivable funds.

What’s a PPP Loan?

Simply put, there’s a loan program offered because of the Cares Act called the PPP.  When these funds are used properly, these loans are completely forgiven.  This means you get to keep the money and don’t have to pay back any of it.

My initial post about the PPP covers the basics and many of the changes along with way.  It’s detailed and helpful, so check that out here. There were also recent updates about Round 2 of PPP, so be sure to read that too.

Can I Really Pay Myself 100% of PPP Loan Money?

If you’re self employed, an independent contractor, sole proprietor, or gig worker, then I have good news for you.  Schedule C workers with no employees can use 100% of their PPP loans as owner’s compensation when choosing the 24-week covered period for forgiveness.

You’re not alone in wondering how to pay yourself and what documentation is going to be necessary to get forgiveness.  I’m going to tell you how to pay yourself PPP loan money as owner’s compensation in four separate ways:

  1. Straightforward Answer—Do nothing and wait.
  2. Good Answer—Continue to do what you normally do.
  3. Better Answer—Open a separate, new PPP account to create clean documentation.
  4. Best Answer—Open a separate, new PPP account and make ten equal transfers over ten weeks.
Get $50 when you sign up for a free money account and deposit $500!

Why Would I Do Nothing and Wait?

Let’s start with the straightforward answer—do nothing and wait.  People are not going to like to hear this, but the SBA has failed to give proper guidance about how to pay yourself if you’re self employed.

Lenders are confused and don’t provide answers.  The guidance online isn’t clear, and all the countless rule changes have left us with more questions than answers.

I don’t like this straightforward answer at all because the SBA has given you these funds to use for your business.  Therefore, as soon as they’re deposited in your account, you have the right to use them.  Let’s move on to the next answer.

Pay Yourself As You Normally Would

A good answer to our question is to simply pay yourself as you normally would.  However, this leaves a huge gray area.  For example, if someone is paying themselves weekly or biweekly or they do some sort of owner’s draw monthly or quarterly, then what does it mean to continue to do as you normally would?

When it comes time to request forgiveness is simply providing bank statements or payroll documents going to be enough to show how you paid yourself?  Let’s talk about a better answer to this question.

Create Crystal Clear Documentation

A better answer for how you can pay yourself PPP funds is to open a separate, new bank account.  

I use CIT Bank for my real estate because it’s a high interest savings builder account.  I make monthly deposits when rent checks arrive to keep that side of my business separate.

SoFi money is another great option for a new, separate PPP account. Right now, you get $50 when you open a SoFi Free Money Bank Account and deposit $500.

The smart reason to open a new account for your PPP funds is that if any part of your PPP loan is not forgiven it’s going to turn into a 1% loan.  Therefore, depositing the full amount into a bank like CIT or SoFi is going to create crystal clear documentation.

PPP Loan How to Pay Yourself

Remember, by doing this your bank statements are going show you receiving the PPP funds into your preexisting business or personal account.  Then, it will show you transferred all of the money into a separate, new PPP account. 

Now, you’re going to need to provide both statements as documentation—one showing the funds deposited and withdrawn, and the other showing that you have received the funds in your separate, new PPP account.

Listen very carefully to this next part.  Because the amount of money you were supposed to receive for your PPP loan was your Schedule C Line 31 divided by 12 times 2.5—essentially, 10 weeks of payroll—some people may have been given too much money.

You need to check your PPP loan amount to make sure you know the amount that will be forgiven.  I created a PPP Loan Calculator spreadsheet that you can access for free to check your numbers.

Request access here and make a copy for yourself.

There were also major updates made early 2021 to the PPP loan amount available to sole proprietorships. It is possible now to apply using your Schedule C Line 7, which is gross income. The calculation is going to be the same as above, except now you’re allowed to use Line 7.

I made a new, updated PPP Gross Income Loan Calculator spreadsheet available here.

It’s unclear at this time if increases can be requested for those of you who’ve already got money using Line 31.

Get $50 when you sign up for a free money account and deposit $500!

I’m Confused.  Why Do I Get 10 Weeks of Payroll If My Covered Period is 24 Weeks?

Some people are going to get confused because they’re only entitled to 10 weeks of payroll.  However, they have 24-weeks to use the funds.  To help clear up the confusion, let me give you the best answer for how to pay yourself PPP funds.

If you’re self employed, first open a new bank account.  Then, I want you to download my calculator to check your Schedule C numbers.

Next, take that correct PPP loan forgiveness amount and divide it by ten.

See, even though you have 24 weeks to use the funds, the correct amount of your PPP loan was only supposed to cover ten weeks or 2.5 months.

Therefore, once the funds are deposited in that new high interest savings account, you need to establish a bank to bank external transfer for 10 weeks.  Over the course of those ten weeks, 10% of your PPP loan is going to transfer right back into your personal account.

This way you can use the funds and show you’ve paid yourself over ten weeks or 2.5 months. 

Let me give you an example.  Someone who received a $10,000 PPP loan would pay themselves $1,000 a week for ten weeks.  

The best way to show documentation that they paid themselves is to transfer the money out of the account where the funds were initially deposited into a separate, new account.

Those funds are then transferred evenly over ten weeks.  After that time, the balance in that separate, new account will get down to zero.  At that time, you have used all of the PPP funds as owner’s compensation.  Congrats!

How Do I Apply for PPP Forgiveness?

When your lenders are ready, they will accept your PPP loan forgiveness application—you can use the EZ form or the S form.  Some lenders are creating a portal that auto-fills your information, so be on the lookout for that. 

Many lenders appear to be going about loan forgiveness differently right now.  Some are waiting on the SBA for more information, while others are encouraging borrowers to apply.

Either way, you should gather your statements from the dates when the funds were deposited in that initial account and the statements of you using those funds over the ten weeks.  Your lender may ask for these bank statements, so I suggest being prepared with all documentation.

Also, remember that this money is not viewed as taxable income.  It is not something that is going to be reported on your taxes as income.

Talks of a second round of PPP funding for small businesses are true too!

Okay, Let’s Recap

Many people are looking for answers on how to pay themselves PPP money.

A straightforward answer is to simply sit back and wait for the SBA to provide more guidance.  However, that doesn’t allow you to use the funds in a way where you feel confident they’re going to be forgiven. 

A good idea is to pay yourself as you normally would, whether that’s weekly, biweekly, monthly, or quarterly.  Simply continue to pay yourself in your own routine manner. 

A better idea is to open up a separate, new bank account solely for the purpose of depositing the entire PPP loan amount.  To be clear, this is not a necessity.  However, it is going to create a secondary form of documentation to show that you received and paid yourself those PPP funds. 

The best idea is to open up a new bank account, check your Line 31 OR Line 7 calculation (depending), transfer the entire amount into that separate, new PPP account, and then make ten weekly transfers back to yourself. This shows that you paid yourself over the course of ten weeks or 2.5 months.

This way when you go to apply for forgiveness you will show that you have exhausted the funds in the correct amount.  Then, you will you get 100% loan forgiveness. 

Please let me know down in the comments if that’s something you would appreciate me posting about in the future.

Get $50 when you sign up for a free money account and deposit $500!

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As always, I’m Rich and until next time.

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286 thoughts on “How to Pay Yourself PPP Loan SELF EMPLOYED”

  1. Pingback: How to Pay Yourself PPP Money – Teacher Entrepreneurs

  2. Virginia Thompson

    I know the EIDL is now available on sba .gov website. Nor sure which loan I applies for its a little confusing but thank you.Withour your help I would be missing out on the opportunity to continue do I g business as I have for over 30 years

      1. Hi,
        I just figured out that we didn’t get the PPP we got the EIDL. I am kind of disappointed. Seriously thought it was the PPP. Anyway can we still apply and try to get the First and second PPP and try the forgiveness or is too late?? I’m sole proprietor.
        Thanks
        Nat

        1. Hi, I got my ppp and I was still on unemployment for 2 week. Can I now transfer the ppp to a new savings account and make 8 equal payments? Instead of 10 because for 2 weeks I was on unemployment. Does it make sense? Why does it have to be 10 weeks? Thanks so much

        2. I thought only 60% of the PPP loan can be use for payroll. Like you said for a 10,000 loan you transfer 1000 every week as salary to your bank you are using the whole 100% of the ppp as your salary. Did I understand correctly?

      2. Rich, firstly, you have a lot to bring and I really appreciate all your best advice. Truly grateful for all your responses to the good questions people have asked and your humble responses, even to repeated questions people ask you over and over.

        So I went through Womply and signed for both 1st & 2nd draw Promissory Notes, the 1st being on April 3 it’s now April 16. Do you know how long they can take before they have to transfer the funds? I have not seen the loan finds yet. Thanks! 😀

        1. Many are reporting about 2-4 weeks. You can try leaving a voicemail and requesting a callback at this number: 855.540.9512

        2. I had this same question with my Wombly loan. What I found out is that the bank has up to 20 days to send funds, but most get it done in 2-3 business days. There is also a kind-of hidden identity check that may be holding things up. If you go into where your loan status is and click “Update Loan”, there is an option to complete an identity check where you Snap a quick picture of your ID, then look at your phone camera and turn your head to the left and right. That’s what happened to mine and I got my funds yesterday (April 19th)!

      3. Hey Rich thank you for all the info you have been giving everyone, i received the ppp loan n i transfer 70% and using the other 30% for rent which they said we can do is that correct

  3. Any downside to paying yourself over an 8 week period….instead of a 10 week period? Recall…..the original guidance, one-way or the other…spoke about 8 weeks so yes…one may say you are funding a “raise” of your AVERAGE weekly income…..but, what if your income is erratic and highly erratic anyway…does it then matter? My “normal” work goes in spurts and fits-and-starts throughout the year. My line 31 Sch C is simply a yearly total….but that in no way = a consistent, weekly draw according to the “formula” I need to use to establish the loan amount. So…if you normally don’t have “equal and regular income”…..what if you do the “best system, your category 4.)…. per the “pay yourself over 10 weeks ” suggestion…..but instead do exactly the same…..different accounts and all….BUT only over 8 weeks. Is that really a problem?

    1. No problem using 8- to 24 weeks to pay yourself for Second Draw PPP. That’s some nice flexibility this second time around ?

      1. Are we paying ourselves over the 10 week period with each draw? So 20 weeks total? Or, is it the combined first and second draw for the 10 week pay period?

  4. I received my loan for the second round of funding (2/18/2020 my loan amount was transferred to my account). Does any of the above advice change with this round to ensure 100% forgiveness?

  5. If I am still receiving some PUA unemployment payments depending on how much I work each week. Can I apply for a PPP loan and still have it forgiven? I don’t want to “double dip.”
    Would it work for me to pay myself from my separate PPP account, that you suggested be set up, on the weeks that I don’t qualify to receive PUA money? Thanks so much, Bambi

  6. Hi Rich,
    You mention that the PPP funds are not taxed which is how I understood the rules but in the case of a self-employed person, I know the “loan” funds are not taxed but are the “payroll” funds taxed on our Schedule C’s for 2021? Also, as a sole proprietor, I have never taken out medicare/taxes until the end of the year – so just a lump sum each month;, ie $1,500/mo. Can I continue to do that with this loan or do I need to do payroll taxes to meet the guidelines?

    1. Hi Sue, sole proprietors can’t actually “pay” themselves, so you can keep doing what you normally do. SBA and IRS keep playing catch up and updating the rules to help streamline issues like this.

      1. Hi thought u said we could pay ourselves?
        Now your saying “sole proprietors can’t actually pay themselves?.”
        Or are u talking about Medicare/taxes?

        1. Exactly, there’s no payroll. “Pay yourself” is just documenting how you used the funds in case they ask for bank statements.

      2. Im confused you said open the new high interest acct to deposit the entire ppp into right, but then you said you pay yourself to the new account? Did you mean pay yourself out of the savings into your personal checking?

        1. Hello Rich, I’m confused by this too, and not sure if we need to open a new account to transfer the whole PPP loan or the new account is for 10 payments for yourself? Here is a copy from the blog post:
          “The best idea is to open up new bank account, check your Line 31 OR Line 7 calculation (depending), and then make TEN weekly deposits INTO that NEW account to show that you paid yourself over the course of ten weeks or 2.5 months.”
          Thank you for clarification

          1. Sorry for the confusion – it was the Recap towards the end that wasn’t updated and worded properly. I just changed it to reflect the rest of the article. Please let me know if anything still needs to be more clear.

        2. He meant (if I understood correctly), you can whole transfer, or take out your cash ppp loan into another bank account, then you can make yourself weekly payments equalling the amount you have transferred/deposited into that such bank account (obviously everything has to be done under your name) .

  7. Hi Rich, I though that only 60% of the funds could be used as payroll and the other 40% had to be used for the business, am I wrong. I am an independent contractor so was going to pay myself the 60%, can I just pay the full 100% to myself?

    1. Hi Gesenia, the rules were changed a few months back to allow 100% to be used as owner’s compensation when choosing the 24-week covered period.

      1. Does this mean if I decide to use the funds to pay myself I have to do the 24-week and not the 10week? Sorry I got confused, at first i was thinking of doing a 10week then i saw your reply on this question. Thank you Rich

        1. The newest guidance allows you to choose any covered period between 8-24 weeks. Still pay yourself over the 10 week 2.5 months.

        2. You can choose. The covered period can be anywhere 8-24 weeks. I suggest 10 weeks to cover the 2.5 months owner’s compensation.

          1. After you pay yourself by transferring weekly funds into a new bank account. Do you recommend waiting to use the money after I make sure it is forgiven? Does this make sense? I don’t want to end up having to pay it all back?

          2. I’d check your calculations to make sure they amount you got is correct. Then, you can safely spend that amount.

          1. I have a Llc I’m the only employee of my business. i am not sure what i fall under as to paying myself. I am just really confused on that part. Can you educate me on where i stand? Am i sole proprietor and how would i pay myself and after i pay myself how must the money be used so that i can try for forgiveness thanks so much

  8. Under the new gross income guidance for maximum loan amount, I am wondering how forgiveness will work. Will there be a formula and documentation required for spending on expenses vs owner compensation (based on line 31 net income); or can one just fully use the new maximum loan amount to pay themselves?

    1. Hi Mike, you can fully use the loan to pay yourself. The SBA has said they want everyone to use the current S-Form for both draws of PPP.

  9. Hi Rich,I owned a barbershop and pay rent and utilities on it. I’m a sole-proprietor with no employees.I’m using my gross income from line 7 to calculate my ppp. Can I use the entire amount as owner compensation (transfer ppp from business account to personal) and spend on how I like and be forgiven? Or do i have to leave 40% of ppp in my business account and pay business rent/utilities,and the other 60% put into my personal account and spend how I like (owner compensation) and get forgiven?

      1. Can I pay myself the entire loan amount (sole proprietor) in a check all at once for 100% Owens compensation dose it have it be weekly?

      2. Hi, I’m a sole proprietor, I opened a separate account for the ppp loan. I have heard that you can pay yourself in one lump sum but have also heard that you can pay yourself over the 2.5 months. Does it matter which way you do it? Thanks in advance!

  10. The new account should be different bank account? Or can I transfer to my savings account within my bank accounts?
    Thank you

    1. I prefer a separate bank entirely – not necessary but a good idea. I have a few suggestions in this article.

  11. My paperwork is still processing for my PPP (I had to sign and return my forms, 2 days ago). If approved… Do you think I will have time to apply for a 2nd PPP before the next deadline?
    I am a Sole Proprietor w/ no employees (I own a creative arts business – teaching kids dance, music, art, and etc).

    1. Yes, lenders have the guidance to accept second applications now. I’m hearing there might be an extension too …

      1. I just apply ppp for the first time and still waiting for approval. Can I still apply ppp second round now or after I receive the fund ( first draw) ?

        1. It’s after you get the first draw money – the lender may contact you as soon as 2 weeks later to get the ball rolling, but he SBA’s side of things takes about 8-12 weeks more in order to process the second draw and get you more money.

  12. Question;
    Lets say someone is currently getting U.I. If they are to receive a PPP Loan, then they transfer the PPP Loan to a new seperate bank account. Once the PPP is in the new account, can that person, not touch the PPP loan, finish off the U.I. for the remaining 3 months of that year’s benefits period, then get off of the U.I. and then start the 10 week PPP payroll process, or once the PPP loan is funded, does that 10 week payroll start immediatly and the U.I. need to be cancelled at the same time period?
    Thank for any info on this scenario.

    1. I have 2 weeks left of Bye with PUA, I have funded PPP loan a week ago to my personal account. Could I finish off my PUA, then use the PPP ?

    1. Hi Diane, this is the term used for “paying yourself” PPP funds. If you got the correct amount based on your Schedule C, then you can use all the money as owner’s compensation.

  13. So it’s not really clear to me. On the one hand you say divide your PPP into
    10 equal amounts and pay yourself weekly, but then your saying in order
    to receive total forgiveness choose 24 weeks. I also thought the period
    started on the date the loan is deposited. I am eligible for 1 and 2 as
    I have not applied before so that would be a lot of weeks.

    1. Hi Heather, they changed the rules in June. You have 24 weeks to “use” the funds, but they are only worth 10 weeks worth of owner’s compensation. Then, they updated the rules again in 2021 saying you can apply a second time as soon as you have “used or will use” the money. All in all, you can apply twice sooner than 24 weeks.

      1. This is great news! So, I just applied and received my first PPP loan. Funds were deposited a couple days ago, and I’m a Sole Proprietor Schedule C business owner. With that said, do I have to wait before applying again for the second PPP loan, or can I get started right away? Thanks!

        1. I think NOT (if I may) first you have to wait till they send you the second draw then verify then sign (if everything’s alright and you should already know by just reading your message from 4.2.21) but you gotta make sure you have had the so called 25% less of your 2020 then you may have had qualified for the second draw and get the loan forgiveness.

      2. If they give me the 2nd ppp loan within 2 weeks time , do I have an additional 24 weeks for that loan ? Or does it combine with the first one , thus having to pay myself more ?

  14. Thank you for all you do! You’re content is great! I originally opened an account for the PPP funds and had them direct deposited in there on Feb 26, 2021. I had to open the account with $25 non ppp funds. Once the money was deposited, I transferred the $25 out of the account. Can I just leave the ppp funds there, or do you still suggest transferring out the full amount to another new account? Once I begin transferring out the funds (paying myself) monthly to a 2nd account, do I then have to transfer it out to a 3rd account showing I used the money? Do the first 2 accounts have to both show a balance of zero? If I am paying myself monthly (too late to do anything else) can I take the last 2 weeks of payments mid month?

    1. Hi Jennifer, the new account is where you schedule the transfers – it can go back to your own personal account then. It’s not a necessity, but it’s a good idea for the sake of clean documentation. Monthly and the last two weeks should work – it’ll create monthly statements showing you “paid” yourself.

  15. Thank you so much! I used your méthod to pay myself for my first ppp loan by dividing by 10. In my second ppp loan, I heard that I can use the whole amount as owner compensation without dividing it by 10.Can you please clarify that for me, since I followed you since the beginning.

    1. Some are saying that’s true, but other lenders are still requesting statements when applying for forgiveness. I’m sticking with the 10 transfers to create that paper trail.

  16. Hi rich! How do I pay myself if used line 7. My line 31 is in the negatives. What should I do? And how do I calculate this? Basically how do you pay yourself if you took a loss?

    1. Same method applies for Line 7. Check your correct gross loan amount using my calculator then divide by 10 and “pay” yourself for 10 weeks.

  17. Hi Rich! I watched your videos, and just to be clear. I divide the total amount into 10 and pay myself that amount once a week, correct? And do I just go ahead and apply for forgiveness 24 weeks from the date I was funded? Thank you so much!!

    1. Yes, and you can apply for forgiveness as soon as the funds are all used. I’d wait though until we know the SBA is approving forgiveness – right now they’re really slow.

  18. Hey Rich, we received our first round of PPP on January 28.
    Tomorrow, March 25 will be 8 weeks since we got funding, but we already exhausted the funds.

    We received our second round of PPP yesterday, March 23. Should we wait to use our funds until tomorrow since it will be 8 weeks from receiving our first round or does it matter at all?

    BTW this was for a sole proprietor.
    Thanks! Enjoy all the info you provide thru here and youtube!

    1. I’d wait the full ten weeks, but it’s your call. May not be an issue in the end, but we’re just not sure right now.

      1. Hello Rich, I will receive my first draw any day now. I have an LLC. Can I use the same 10 week strategy to pay myself? I’m also paying 2 other employees

  19. Hey Rich, you’re probably the only person who has a clear strategy about this ‘pay yourself’ thing and I appreciate that but here is a question I have, let’s say we did exactly the way you’re showing us and paid ourselves 10 weeks. As this is owner compensation, can we use this money with anything we want like paying down a debt or purchasing stuff, basically like we would use our own money in normal life? It’s really confusing. For example I do investment on a regular basis based on my income and send moneys to overseas to support a family member, could I still do this after ‘paying myself’ ? Thanks for all the help.

    1. You’re thinking of it properly. Once you’ve “paid” yourself owner’s compensation, then you can use the funds anyway you choose.

  20. Hi! Above you state: “Gesenia, the rules were changed a few months back to allow 100% to be used as owner’s compensation when choosing the 24-week covered period.” Then, later you recommend “Same method applies for Line 7. Check your correct gross loan amount using my calculator then divide by 10 and “pay” yourself for 10 weeks.” I’m sole prop, no employees, used line 7 for loan. Can you clarify the 10 or 24 weeks as it relates to 100% or 60% forgiveness? Thank you for all your work!

    1. When you elect the 24-week covered period, you can use 100% as owner’s compensation. This means 2.5 months or 10 weeks. To be clear, you can “use” the funds anytime throughout the 24-week covered period…for example, it does not need to be used in consecutive weeks. There’s flexible now.

      1. Rich, can you please show me the SBA’s documentation where it states that one MUST use the 24 week covered period in order to use the full amount as owner compensation? I cannot find this on any of the SBA guidance or the PPP forgiveness form, so I would like to know where you got this info. I would like to use the 8 week period and immediately apply for the 2nd draw.

        Thank you.

  21. You have 24 weeks to use each draw. I’d use the first draw during weeks 1-10, then second draw weeks 11-20.

  22. Hi Rich,
    I am trying to get more clarity regarding being able to apply for first and second round PPP loans. I never applied the first round. I just applied a few weeks ago for my first round and I should be receiving my funds within a week or so. I was told that I could immediately apply for the second round once my funds hit my account. I know the stimulation is that you have to have spent the first round of funds or will use them before the second round hits your bank account. My question is do you have any suggestions on how I can spend the first round before the second round deposits. I am self employed and will be using 100% of the funds to pay myself. I you you suggested using the method of dividing the amount you receive by 10 weeks and that is what you need to pay yourself weekly however I will have received the second round funding before 10 weeks have passed. Thank you

      1. So I’m confused about that. If you receive your first draw, then
        immediately apply for the second and receive it say three weeks later doesn’t
        that mean you have two loans running on the same time line, I thought that
        wasn’t allowed. Or can you take the first, use the 10 week period, then
        start using the second even though you received weeks earlier. Thank you for all your help.

        1. What was the answer you your question? I have both of my loans now. I’m just waiting for my 10 weeks to be up to start my 2nd draw for 10 weeks.

    1. Hi Maria
      What lender did you use for your 1st & 2nd draw loans?
      I was told by my lender (WF) that I had to wait at
      least 8 weeks to apply for a 2nd draw.
      Thank you

  23. Hi. I got my ppp loan first draw deposited in my personal checking account, and I open another checking account and transferred all of the ppp loan money there. So i am a independent contractor. How do I pay myself w that ppp loan. Do I transfer money from my new checking back to the initial bank that I deposit my ppp loan in? Thank you so much. I am so confused

      1. Hi Rich , just to confirm we are transferring the full amount of funds from the original account the ppp was deposited into a new account in full and paying ourselves back weekly or monthly into the original account where the money came from over a 2 .5 month period.

        So the account should show one large withdrawal out and then 10 smaller deposits equal to the same amount going back in ( roughly 3 if paying yourself monthly) ?

  24. I am a self employed electrician that gets a 1099 and I just got my first PPP loan, you stated to open another account to put it in but I would like to stay at my bank I use now, that would be ok? Then I could just transfer the money from that new account to the account that my loan got deposited into to pay myself correct? Over a 10 week or 24 week period?

  25. Hi Rich,
    Great job, thanks for the info.,
    I am a realtor , I received my ppp loan last week, I used my 2020 tax docs to get the loan,
    Now what I need to do to apply for the second round of ppp loan? can I still use the same docs of 2020 , what do you suggest?

    Thank you

  26. Thank you for all of your clear guidance! One question, I am a sole proprietor no employees, just received my PPP loan and deposited it into a separate, new checking account.
    If I have reopened my business can I pay myself the full 10% of the loan per week or can I only compensate myself up to my average weekly amount minus what I’m earning now? I’m using it all for compensation. Thank you.

    1. Your income now doesn’t impact the PPP owner’s compensation. Basically, you pay yourself 100% of the correct PPP loan amount.

  27. If I open a new account would I open it into my businesses name or does it matter? I’m a self employed sole Proprietor no employees so I use my personal checking account for my business. Thanks

      1. Okay I may be slow to understand. What you’re saying is to deposit the entire ppp loan amount into my business account. And then transfer the entire ppp loan amount into its own new account. And from there every week for 10 weeks it can go into my personal account?

        1. Hey Rich, would it all work the same if your a gig employee (Uber/Lyft driver)? Also once I get approved for the 1st Draw and wait my 10 weeks is it a bad idea for me to apply for the 2nd draw immediately or should I wait until I get approved for forgiveness then apply ??

          1. You can apply for Second Draw as soon as the lender is ready to accept the application.

  28. Rich,
    I really appreciate the knowledge and all that you are doing to help people. It is greatly appreciated.
    I’m eligible for the 1st and 2nd draw. So do I do the 10 week payroll plan for the 1st? Then also repeat the 10 week payroll plan for the 2nd draw as well?
    If a person did not elect the 24 week repayment option. Do they have to use 60% for payroll and 40% for business expenses? Or does the 100% use of funds for payroll still apply?

    Thanks

    Thank You

    1. Yes, use the 10 weeks for both. It is very good idea and a simple way to document everything. The older covered period did not allow for 100% to be used for owner’s compensation … whereas the 24 week covered period does.

  29. Hi I received the first ppp loan and wasn’t sure of how this works , someone told me to pay myself with money orders which I did , I am so unsure about the 8weeks and 24 weeks I believe I must have spent it before then , also I did not know a forgiveness once open and missed out I guess , the funds were deposited in my account aug 2020. So my question is will I have to pay back this funds?
    Also, I just received the 2nd draw in my personal account. should I open a different account and deposit the funds there , then pay myself 100 percent cause I am self employed and working as well.

    Thanks
    Rich

  30. My line 31 Sch C is simply a yearly total, but that in no way is a consistent, weekly draw according to the “formula” I need to use to establish the loan amount. I was approved for $5,049 and that breaks down to $504.90 a week. However, there were weeks I made more than $500, some weeks I made $500 (or around that) and other weeks I made less than $500.

    So, if you normally don’t have “equal and regular income,” then what? Can your weekly transfers be different amounts over that 10-week period? And, since you technically have 24 weeks to use it, then why couldn’t you transfer the funds from your existing account to another account and then back again for one lump sump payment while simply putting “owner compensation payment” in the transfer note or memo? It may be one week, but you used it in the 24-week period.

    1. Ultimately, it’s your choice. The lenders were asking for bank statements earlier, so clean documentation is a very good idea.

      1. Hi Rich, thanks for all you do and your detailed response to the questions been asked. I just received my first draw of 2,590 and I work as Uner/Lufthansa driver. I plan to purchase a new car, can I use both first and second draw to purchase and submit the receipt as a business expense?

        I’m waiting to sign the second draw in a few days. Please advise or should I. Compensate myself the first draw or wait to use both loans for 100% purchase of my new car?

  31. Hi Rich,
    I just received my first round PPP loan (using line 7 form 1099) with 24 weeks covered period. Since I’m an independent contractor with no employee, I’m about to use it as payroll expense by paying myself weekly check. My question is instead of paying myself 10 weeks of payroll as you stated, can I spread it to 24 weeks of payroll? Won’t it affect my forgiveness application later on? Thank you in advance.

  32. And all the bank statements need to show is that you paid yourself and used it as owner compensation. Am I not correct? They’re not specifying exactly how we go about it though whether it’s the way you suggest or some other way as I suggested.

    1. You are right. Unfortunately, there’s been a complete lack of guidance by the SBA. With so many self-employed having comingled funds – personal/business – it’s my best guidance to create clean documentation in order to be overly cautious and circumspect.

      1. Rich,

        Does owner compensation need to be reported as income when certifying your unemployment (PUA)?

        Can you draw Unemployment/PUA AND Pay yourself owner compensation concurrently?

        In Michigan, you have to report “earnings “, wages and taxable income.

        Thoughts on getting BOTH?

        Thanks.

        1. I’ve always recommended NOT double dipping at the same time. However, each state has their own requirements. PPP is not taxable income, so I’d ask Michigan’s UI directly.

  33. The loan amount is based on payroll, but here’s one way “hypothetically” you could cheat that. As an owner or manager, you COULD give yourself a one time payroll payment for a large lump sum after transferring it or having it deposited into another account. Call it “you 1st/2nd/3rd/4th quarter pay”, as you’re all of a sudden deciding to pay yourself through payroll instead of pass through income from the business.

    I’d assume, in this case, it’d still be forgiven.

  34. According to bench, America’s largest professional bookkeeping service for small businesses, there are no special conditions to follow. You can simply transfer the appropriate amount to your personal bank account. If your loan amount is $150,000 or less, you can use form 3508S to apply for forgiveness. You will only be required to certify you used the loan for OCR. Otherwise, include your OCR as “Payroll Costs” on line 1 of form 3508EZ or form 3508.

    SEE: https://bench.co/blog/operations/owner-compensation-replacement/
    Refer to section: How do I claim my Owner Compensation Replacement?

  35. According to Philadelphia CPA (Mark Fineberg, CPA) in terms of paying yourself, you don’t have to pay yourself every week for 10 weeks.

    They say you can take the loan money out of your business account in one lump sum and put that in your personal savings anytime during the 10.8-week period and then apply for forgiveness in week 11.

    Because both your loan and forgiveness are based on your 2019 Schedule C net profit (yes, last year), you simply need to use the loan money for personal purposes. This is how you pay yourself and obtain loan forgiveness the easy way.

    SEE: https://philadelphiacpa.com/post/sole-proprietorship-ppp-how-to-pay-yourself
    Refer to section Paying Myself
    Spending in Chunks is also worth reading.

    1. I read that article too and am so confused as to why Rich is not offering that as an option. I do not pay myself with any type of “payroll” and i don’t see any difference in paying yourself weekly or in one lump sum.. and no where do I see in this explanation if you have to have it sit a week before starting your weekly payments. Sitting here confused.

      1. The banks were asking for statements showing “how you paid yourself” when seeking forgiveness. If this continues, I suggest have the documentation. It’s a safeguard … may not be necessary, but it’s a very good idea.

  36. Hi Rich,
    I just received my first round PPP loan (using line 7 form schedule C ) with 24 weeks covered period. Since I’m an independent contractor with no employee, I’m about to use it as payroll expense by paying myself weekly check. My question is instead of paying myself 10 weeks of payroll as you stated, can I spread it to 24 weeks of payroll? Won’t it affect my forgiveness application later on? Thank you in advance.

  37. Chirag Zapadiya

    Hello Rich Smitha
    Thank you so much for your Guidence. it help me a lot and finally i got first PPP loan on March,31 2021. i got loan base on 2019 because i didn’t file 2020 taxes yet. base on 2019 i got $18936 ppp loan. my question are :
    1. how can i know that am i eligible for 8 week or 24 week covered period?
    2. how can i contect my lender ? i got money through “Customers Bank”.
    3. how i calculate my compansation income or just make 10 equals transaction of my loan?
    4. Once all PPP loan transfer in 10 Equals payment to different bank account, i will be eligible for forgiveness loan right?

    Thank you so much for help

    1. You can elect either covered period; however, the 24 week covered period allows for 100% owner’s compensation. This article has PPP loan spreadsheets you can access to check your numbers. Yes – you can apply for forgiveness as soon as you “use” all the funds.

  38. Alfred A Raguckas

    I have read that you can use up to 40% for business expenses. I am a self-employed auto detailer. Once I transfer PPP funds to a new account. Can I use a debit card tied to the new account or pay a business credit card to pay for supplies? And transfer the rest to my personal account for payroll? I won’t know the exact amount of supplies each month, so how would I pay myself from PPP funds on a weekly basis over the 24 weeks? I will still make some business income so do I just use the full PPP loan for payroll and use revenue received to pay for supplies?

  39. HI Rich,
    Thanks for the valuable information. I am sure everyone of us found it very helpful.
    This my scenario.
    “” I was approved for $18,000 yesterday but I did not receive yet.”
    this was my first round. Now, I need to separate account as you suggested to pay myself for the course of 10 weeks.

    How much each week shall I pay myself.?
    Can I apply for the second round of PPP even I before I ran out of money?
    When usually is the deadline to apply for the loan forgiveness?

    Thanks in advance for helping me out.
    Have a nice day

    1. You can apply for Second Draw as soon as the lender lets you. The newest guidance is that you can apply so long as you have used or will use all of First Draw. Also, I suggest paying yourself weekly, evenly divided by 10.

  40. Rich, I think it states that as soon as the PPP is Funded we must start the PPP. Do I have to do the 8 weekly pay roll. or can I do either Bi-weekly or a monthly salary until the 2.5 is used up and still get forgiveness? I am a self-emplyed business, 1 person? Thanks.

    1. You have 24 weeks to use the funds, so you can decide when to use them. To keep it simple, I suggestion 10 weeks payments which equals the 2.5 months of owner’s compensation.

      1. Hi Rich. So I received my first round of ppp. The second rounds due date is may 31st. Can I / how can I spend the first ppp in 7-8 wks so I can apply for the second round. Also do I have to apply for and get the forgiveness before applying for second round. Or am I just too late for the second round. I don’t have much in expenses but i could use some new equipment. Can I use some for that. Also the mortgage interest and utilities, is that good for my percentage of my business use of home office or my entire home. I am a cleaning lady

        1. The latest guidance is that you can apply for Second Draw as soon as you have used or will use First Draw. Basically, I’d contact the lender and tell them you want to apply as soon as they are ready to process it.

  41. Rich, As a self-employed, no other emplyees, can I give myself a one month salary? Split the 1st PPP Draw into 2 months? If I get the 2nd PPP draw, do the same? Will that keep me in the forgiveness structure?
    Thanks!!!

  42. I received my ppp loan in my savings account. I should open a new checking account and deposit my funds from my saving to my new checking weekly? Or should take all money out my savings and deposit all into my new checking and re-deposit back into my savings weekly for the next 8 weeks?

    1. I’d do the second option. Also, the owner’s compensation amount is for 2.5 months, so I’d suggest “paying yourself” over 10 weeks.

  43. Thanks for answer my question!
    What is the formula of how much money will be forgiven.
    Is it line 7 or 31 divided by 52 x 8

  44. Hi Rich
    Thanks for all your information!!
    What is the minimum waiting period to be able to apply for a 2nd draw PPP loan?
    First draw was funded on 02-24-21.
    Thanks

  45. What if you paid your expenses from the checking account that the money was deposited into – can it still be forgiven as long as the expenses were “qualified+ ie. mortgage, utilities, etc. or should I go ahead and open a separate account and transfer the remaining money? I thought as long as the money was used for qualified expenses it would be forgiven. I am an independent contractor, so I just used some of the money to pay bills I would typically pay with commissions.

    1. Only a portion can be used for “approved expenses” – I suggest going with owner’s compensation then using the funds however you see fit after you have paid yourself.

  46. Hi Rich, Thank you for the great information and guidance. I’m a sole proprietor and I’ve been approved for my first PPP, YAY!
    I’m wondering if I apply later and get the second PPP do you suggest opening a second separate account for the second round PPP or put the funds in the account the first PPP funds are transferred to?

    1. Yes, separate new account. It’s NOT necessary – but it’s a good idea and will help with documentation.

  47. I just applied for my first PPP. Do you think it will be possible to get the second as well?? I feel I am going to be too late and running out of time. I thought I had applied for the first PPP last year but Just found out it was actually the EIDL. I don’t know how I got so messed up on that. I was under the impression it was the PPP. Anyway do you have any suggestions as to what you’d do

  48. Rich , thank u for all your info. It is great what knowledge u have and give on the situation… I’m a little confused when I looked at that forgiveness form where it says
    “ depending on which time frame u choose 8 week or the 24 Week period “
    Where do u even choose that ? I thought u just use it after u open another account ( which I did yesterday) when I got the loan deposited into my personal account. Then transferred the whole Loan amount into a brand new account and will pay 10 equal payments every Friday for 10 weeks. So where does this 8 week and up to 24 weeks play into this ? Ima. Little confused. Sorry.

    1. You address the covered period when applying for forgiveness. The 8 weeks doesn’t allow for 100% owner’s compensation, so I suggest going with the 24 week covered period.

      1. Got it. Thanks for clarifying. Brand new ? … MOST IMPORTANT… I’m going into my 4th week this week paying myself 1/10 of my loan amount every Friday for 10 weeks. I just got approved TODAY for my 2nd drawer. Let’s say the 2nd drawer gets deposited into my account In a week let’s say. I WAIT to START 10 equal payments to my self again the WERK AFTER I USE MY 10th and FINAL PAYMENT out of 10 weeks from my FIRST DRAWER … correct ?? Then I start on the second drawer after ALL MY FIRST DRAWER FUNDS ARE 100% used up right bud ? Thank way they don’t intertwine… The FIRST DRAWER gets used In Weeks 1 -10 & the SECOND DRAWER gets used In weeks 11-20. Sound about right ??

          1. Thanks so much. Wouldn’t have been able to do this without your guidance and help. Have great day Rich!

  49. Hi, Rich. I live in California and I have been receiving the pandemic unemployment money for ICs. I just got approved for the PPP. Now that I’m going to get PPP, do I just stop the unemployment?

  50. Rich, amazin job thanks! I was looking everywhere but I cannot find the answer. I applied for the PPP with Schedule Line 7. And looking to the spreadsheet and making the calculations is giving me so less money, less than a half is forgivable because of line 31. I don’t understand, should I pay myself the total loan amount with line 7 for 24 weeks? or just keep the amount in the spreadsheet line 31 and pay back the rest of the loan?

  51. Hi Rich,

    I got approved and the PPP loan will be deposited into my business account, from there I can transfer the money into my personal account correct? Also, can I pay myself the full loan amount in one lump sum instead of over 10 weeks?
    Thanks! I appreciate your help!

  52. Thank you for doing what you do! This really helps out people like me who are new to this world.

    I applied through Womply, and got my PPP loan approved. My schedule 7 is $67,930 total with my husbands schedule c and mine combined. From the spreed sheet you provided, our PPP loan needed to be $14,152.09. For some odd reason, they have us at $20,833? And they have already deposited the amount to my account. What would you recommend me do about the wrong amounts and paying myself for forgiveness? All around what should I do? I don’t want to get in trouble. Also, when I applied since my husband and I are both independent contractors, we file taxes together every year. So when I applied for the PPP loan we applied under his name only but also included my schedule c. Was this done correctly? Or did I needed to apply separately?

    Please help with any suggestions!
    Thanks in advance!

    1. Something seems off with your numbers and the calculation. Do you each have your own Schedule C tax form?

  53. Hi Rich, so does it matter what I do with the money after I transfer it into the new bank account? Is the SBA or my lender look into the end usage of the money. I intend using it to paying off some debts after I transfer it into my new account.

  54. Hello Rich,
    Thanks for all the work you do to help us, I really do appreciate it so much.

    I watched a lot of your great videos on youtube, and I did not find the answer to the question I have. first I am self-employed and I just received my first draw PPP loan in my account. Now, can I use this money to pay myself and at the same time I can go to work? Or just paying myself and staying home?

    thanks again Rich
    Tom

  55. I applied for the first draw PPP Loan and the account that I used for the deposit is my regular everyday account that I used to pay to do everything. Can I open a new account and transfer the money to it , then use it to pay myself so I can have bank statements that only reflect the activity for the loan.

  56. Do I claim my PPP money on my unemployment if I am not using the money to pay myself? Using it for other expenses such as my rent, utilities, business expenses, IRA contributions etc? Not sure ow to handle this. If I do put it on unemployment do I put the whole amount on the check or divide it by weeks? Not sure what to do. You cannot reach anybody in my state to talk to at unemployment office to help with this.

    1. Each state has different rules when it comes to unemployment. The state is the only one who can answer that clearly, but they are very difficult to reach.

  57. Hi, I opened a new savings account but the bank charged me a one-time $10 fee. Due to this, my first deposit is $10 shorter than it should’ve been. What should I do? Deposit $10 as a separate transaction? Add an extra $10 to the second deposit? Or transfer it back to my primary and start over? I’d appreciate your advice.

  58. Is it possible to pay yourself “back” pay? I’ve been unemployed as a self-employed nail technician since last March. I have 10’s of thousands of dollars gone in rent on our space we ultimately lost and personal income. I have just applied for my first PPP. I have thousands to pay myself back for. Thanks for any help. This is probably the most clear and informative info I’ve seen, on just about any topic, actually!

    1. Yes, you can pay yourself 100% of your correct loan amount if you’re Schedule C. Thanks for the kind words too.

  59. Hi…. As a self-employed, no other emplyees, can I give myself biweekly salary? Split the 1st PPP Draw into 5 biweekly( already got 1st PPP draw about 10 days ago) and then do the same for 2nd PPP draw? Will that keep me in the forgiveness structure?
    Thank’s

  60. Hello, I was approved for the maximum as a sole proprietorship with no employees. Just to confirm, I would pay myself the full amount of the PPP loan over the course of 10 weeks?

    1. Also, should I write myself checks or just simply transfer the money from PPP account to personal account? I used to the same bank and just opened a separate account.

  61. Hello Rich. Thank you for all your advice and Info. Quick question…. I received my FIRST PPP loan on April 5th. It got deposited Checking account and I open the brand new bank account and transfer the whole thing to it as you advised. Now I’m going to pay myself 1/10 of the loan amount every week out of the account I transferred it to back into my original account that it came from. I wanted to know when I complete the application for the second draw loan now am I allowed to do that while I’m still paying myself and it’s only going into the second week that I’ve had the first loan even though there are still 9 more payments weekly that I’m going to pay myself? One of the ?’s on the second application is that u must use or WILL USE the remainder of the first drawer before the 2nd drawer is disbursed. Thank you very much.

  62. Hey I’m a truck driver I have received my ppp and I was wondering if I can write a check for the whole loan in one large sum. In to deposit it into my personal bank account to make it easy? thank you

  63. Self employed sole proprietary, put ppp loan in separate account, pay my self 100% of it over the next 8-24 weeks. Loan forgivin??? Or am I missing something

  64. I’m a truck driver I was wondering if I can pay myself the whole loan lump sum in one transaction to pay myself 100% owner comp it to my personal bank account?

  65. Thank you for your guidance, so appreciate it! And with such clarity. However, I do have a question:
    I just received my first PPP on March 22, 2021 can I still apply for second draw? I have read, in one article, that the first PPP had to be deposited in my account by Feb 3 2021 to be eligible to apply for second draw. Is that true?

  66. Why wouldn’t you just leave the funds in your business account and write yourself checks out of that account.. then use the checks and statements as documentation you paid yourself? As long as the total is what you were funded within the required 10.8 weeks?

    1. Hi April, many don’t have business accounts and some have no separate between business and personal banking.

  67. Rich,
    I have read all the comments left and several asked, one even providing the link where she got the information on just paying yourself all at once and then claim forgiveness in week 11 and you did not acknowledge any of those questions with a response. Is there a reason why? I read that same article from a Philadelphia cpa and it says for those who are sole proprietors can make it simple by just paying themselves one lump sum. Would you please address this?

    1. When lenders began asking for bank statements and documentation on how you paid yourself last fall/winter, I made sure to share best practices in my videos and on this site. You can try a lump sum, but I’m sticking with creating clean documentation that is not muddied with personal transactions or non-PPP related business.

  68. Hi Rich,
    I received the PPP loan deposited in my business account. I transferred it to a separate account as recommended. I just realized that new account is a personal account not another business account. Is that going to be a problem when I apply for forgiveness and show the statements for documentation?

    Also, just to clarify: I can apply for the second round PPP now even though I haven’t used the funds and won’t use them all for 10 weeks?

    1. No problem with personal account. It’s now okay to apply for Second Draw being using it all so long as you “will use” it.

  69. I noticed the application for the 2nd draw states that we mush prove a 25% reduced income from 2019 to 2020, but it does say something about quarterly. What documentation is needed to prove this? Annually I don’t qualify but I do if we are just comparing quarter 2. Not sure what kind of documentation I will need to prove this for forgiveness??

  70. I have done exactly as you said above and paid myself over 10 weeks and applied for forgiveness. Now applying for my second PPP. This time I applied also for EIDL as I am understanding I can do both as long as only one is for my payroll and then the other for paying my tax bill and biz expenses? Thanks so much for being so very clear and helpful

  71. Does independent contractor with LLC have the benefit of getting a PPP Loan into their business account, then transferring to new account (as a whole), then to a personal account every week for 10 weeks equally? Or would this only work for other sole proprietors that don’t include LLCs? And would applying for a PPP Loan through a bank make any difference or woulda SBA be recommended? Please and thank you for all your help!

    1. You can apply and get PPP with or without LLC. Lenders process the loans, so you don’t go through the SBA directly.

  72. Hello Rich I applied for the first and second draw loan at once. I was wondering about the second ppp loan is that considered a extra 10 weeks in pay & how would i pay myself properly if I get both loans around the same time. Would I use the first draw for 10 weeks then do the second one for another 10 weeks? Thank you & have a wonderful day!

      1. Hi I am an uber driver/gig worker and I opened a Separate checking account within the same bank which is bank of America and my PPP funds were funded into my original personal checking on April 7 2021 and my funds were transfered the same day to the new checking account with the same bank but my question is can I pay myself for the 10 weeks
        with personal checks from the new checking and write on the check for example payroll from 4/7/21-4/14/21 even though it’s not a business account?

  73. Thank you. Best info I have found on the topic. Just received 1st PPP funds.
    Questions about 2nd PPP…. Does the 2nd PPP application require the same documentation as the 1st draw or are their different requirements? Will the 2nd PPP loan amount be the same as the 1st? Must only the application be made prior to May 31st or must the application AND funding be completed prior to May 31st?

    1. Need to show 25% reduction in gross revenue for second draw. Deadline for applying, not funding, is currently May 31st. Good luck!

  74. Hey Rich, I want to make sure I get the 100% forgiveness. I received my 1st draw opened a second account for the transfer. So, am I suppose to start the 10 weeks the day of the deposit or wait until I receive the second draw. This is a weekly pay for Owners comp.

  75. I got a small PPP loan for my LLC, my partner and I have been on unemployment. The amount if I spread it out between the two of us, would be less than the allotted unemployment max for the week regardless. For my own clarity, I paid myself the PPP in one lump sum. and certified since that I have made more than the allotted weekly on U.E.
    But as it is one lump sum, and I haven’t worked, the money has been dispersed. When can I safely re-certify for U.E., 8 to 10 weeks?

  76. Rich
    Thanks a million for useful information regarding PPP. Can I split my “pay to myself”
    compensation into 11 weeks instead of 10 since 2.5 months are equivalent to 10.8 weeks . Or it has to be exactly 10 weeks within a cover period of 24 weeks. Can I use any 10 weeks of the cover period? Also, what would be the cover period for both of the loans(1st &2nd draw). Is it going to be 24 or 48 weeks concurrently?

  77. Hi Rich
    I have a EIDL Loan I have been using it to purchase supplies, a laptop, and a printer,I can also use to scan and copy. I have a employee I want to know if I can pay her with the EIDL Loan.

    Would it interfere with my PPP when I get approve. I am going to pay my self the ten weeks. If I get 12,200.00 can I divide it by 10 and pay myself for ten weeks and then apply for the forgiveness.

  78. Hi.Rich
    Can I use my EIDL to pay a new employee monthly. Can I pay her.with a check from my EIDL account.? Also if I need to can I pay her cash? Can I use the PPP to.pay myself during the same time I am paying her with EiDL, but with a different account (PPP Loan). Bench.said.i can use.my EIDL.for payroll is that true
    I have heard so many different things just wanted.to keep the correct record. Also can I pay a employee that comes in to strip and.wax.the floors I .was using these things during the time.covid started.

    Thanks for all great information my God continue to.bless you.

  79. Hello Rich,

    I think I understand from your other answers that as a sole proprietor the PPP loan does not count as income, and when I “pay” myself that amount it will not be part of my income? So this amount will not appear on Schedule C as part of profits or on schedule 1 as additional income? I am trying to figure out if this “income” will count towards my MAGI for Health insurance subsidies, as the amount I make is usually close to the maximum income to qualify for subsidies.

  80. Hi Rich, great stuff you’re putting out there. I have a question. I’m a retired RN, recently returned to work to help with Covid and I own a small ice business. I only service one company that uses it to neutralize chemicals. Am I still eligible for a PPP loan? If so, do I include all family income or just the business income when applying? Thanks for all you do!

    Ben

  81. Hi Rich, great info but I have question and hope you can help me do things right, I applied for 1st time 1st draw ppp on April 1st and got the fund April 26 2021 to my business account, I am under the unemployment PUA as sole proprietor, i filled for the ppp loan by line 7 gross income, I revived total ppp loan amount ($20,833.00) to get %100 percent forgiveness should I divide the total amount loan by 10 or 11 week and pay myself that amount of this divide around $(1893.00) weekly until the total loan amount transferred to personal account and report it to the unemployment PUA as self employed earning weekly ? I am really confused and need help how to calculate it
    I applied for the loan by line 7 ( gross income ) $100,000,00
    My line 31 net income ($13,495,00)
    I am currently under unemployment PUA as sole proprietor
    Can you please based on the info above help me calculate the amount that I should pay myself and the right cover period to chosen and if I can use the whole ppp funded amount to pay myself ?
    Thank you in advance

    1. Fellow PUA, you would use your loan amount divided by 10 (2.5 months or the same as 10 weeks) and report that to your weekly unemployment agency as pay from yourself (sole proprietor). Just taking the loan amount 20,833/10 = 2,083.30 per week. I have heard lots of people attempting to only pay themselves only once a month, or some other creative way, and collect the other weeks in that month or all at once. In my reading of regulations and rules produced, in states that don’t allow both PPP and UI/PUA, it appears that trying to circumvent the fact you were given a loan to compensate your weekly pay for 2.5 months will only lead to trouble. It could be double dipping and lead to issues with the state or impact the forgiveness of the PPP. I want to note that there are some states that DO allow both PPP and Unemployment (UI or PUA). If you are receiving PUA in one of those states you shouldn’t have to worry about any double dipping issues if you follow their guidelines.

  82. Hi I have the same question as Ali from 4/26/21. Line 7 from section C was also used to calculate my loan. Thank you and your video has been very helpful

  83. This is an awesome article! It was very helpful in explaining how to pay myself. Thank you for sharing your knowledge, your time and for helping those of use who needed it.

  84. Hi everyone,
    I’m wondering if it’s required to include a note/memo saying “Owner’s Compensation” on each transfer from primary to secondary account? I have done 3 transfers so far without such note/memo.

  85. So….Do we show the bank statement where the loan was deposited to or your new bank account bank statement. Or both? To apply for PPP Loan Forgiveness. Because you said transfer the whole amount of the loan to the new bank account then transfer it back to the original account the loan was deposited to weekly for 10 weeks.

  86. Hi Rich,

    I’m interested in doing the “better” and “best” option you mentioned. However sources are still unclear on regardless if you transfer the entire amount into a separate account or do it over a 10 week span, how can you use those funds as a gig worker such as Uber. Because you were a rideshare driver, can you begin to use the funds for personal purchases? Examples are electronics, cars, home appliances etc… Because you don’t have employees so out expenses are different to get the loan 100 % forgiven. Can you please take it further in your explanation regarding spending the money on personal wants and desires after you transfer it into a separate account?

  87. to Qualify for 100% forgiveness what can you spend you money on after you transfer the balance of the loan another account?

  88. I have a checking account and a savings account. I have the PPP loan going to my Checking account. How do I pay myself for 8 weeks. Could you please give me a format with transferring the money to pay myself so I can have a nice paper trail of how I used the funds so it can be forgiven.
    I opened a Business account as well.

  89. Hey Mr Rich. I just wanted to fully understand this. The process is to open a new account first, my question is does it have to be a savings account? Can I do just a regular checking since I’m just paying myself back into my checking anyways.

    Next, after opening a new bank account, we apply for the PPV loan with the new bank account info to be initially in.

    Then we transfer weekly into our old personal checking last account?

    Because it sounded like 3 transfers to me or I’m just overthinking it. It sounded like you said, the loan gets initially transferred into your current account, then transfer all of the loan into the new account, then transfer weekly back into your old account for 10 weeks.

    Or can we just initially get the loan deposited into the new account to being with then transfer it by weekly to our current personal account?

    1. Checking account works too. It’s 10 equal transfers over 10 weeks, which shows the 2.5 months owner’s compensation.

      1. Okay. Also, you said 100% “owners compensation”. Does that mean after you pay yourself and transfer it to your personal account, can you use it for anything? Or is there still requirements for using the PPP?0

  90. Hi Rich,

    I am a Lyft driver who just got the PPP Loan of $20k to the personal account Bank of America
    -Qualified for $20k PPP
    -Monthly Payroll of $8k
    -$3k given to lender
    -$17k PPP left in the personal account

    How do I pay myself in 2.5 months?

    Should I open a new bank account under the same bank to transfer the PPP Loan by the amount of $8k each month?

    Or do I have to write myself a $8k monthly check and say payroll in it?

    1. Red flag-$3k to lender. No one should be charging you to do this loan like that. If your PPP loan amount with the SBA is $20k you need to use and pay back $20k not $17k. Lender fee for PPP loan amount is not likely found on a previous schedule C/F as an expense to qualify it for use with PPP proceeds. The 2.5 months can be paid to you as you deem however, Rich recommended weekly with documentation of transfers as described above. You can create and log in here to confirm your loan amount with SBA: https://caweb.sba.gov/cls/dsp_login.cfm

      Best wishes to you.

    2. Hi William, there shouldn’t have been money going to the lender at all. I’d be concerned about having the proper amount/paperwork/forgiveness, etc.

  91. This is a very informative video and well-laid out process. Thanks for providing this invaluable information.

  92. Hi everyone, anyone know if it possible to apply for ppp 2nd round while you still pay weekly the 1st round ppp as whole owner compensation which required at least 11 week ( technically I am eligible for 2nd ppp cuz I got % 25 reduction in the revenue) i received ppp 1st round April 26 and I will pay it all to myself in 11 week, should I wait to spend it all to be qualified for ppp 2 ? And what does it mean when SAB says you must spend it or YOU WILL spend it for ppp ? It does it mean u can get ppp2 while you still not yet spent all the ppp1 and what chances for forgiveness I. This case
    Thank you in advance for anyone can’t provide info for this subject

  93. Hi Rich,
    I received my 1st PPP loan on April 16 and I have been writing checks to myself weekly.The 2nd draw is schedule to be deposited this week. Should I wait until the 8 weeks for the first draw before using the 2nd draw. And do I have 24 covered weeks for both draws. Should I apply for forgiveness after I use the first draw? I’m a sole proprietor and I’m using 100% owners compensation. Thanks for your guidance.

  94. Hi Rich,
    Thanks for this information and for your guidance- it’s the best explanation I have found out there, super helpful!!

    Quick question. One of the online lenders lost my application last August and I did not receive any funding. However, I was funded for a first draw just last week under the new round. Is it now possible for me to request a second draw in my case given I didn’t receive anything the first time?
    Thanks!

  95. Sorry if you answered this for me I can’t find my original post.

    I’m on my 6th week of the first draw paying myself 10 payments. I received the 2nd draw about 2 weeks ago. Can I still get forgiven on the 2nd draw if this overlaps and I wait 8 weeks before I start using the 2nd draw. I will make 10 payments on this draw as well.

    Also on the PN I have harvest there in no lender number just the SBA # will this be the same number we use for forgiveness. We can’t reach Harvest to get the loan number if we do need it. I see others say its the same number but, they have different lenders.

  96. Thank you so much for all your information! I am very new at all of this. I formed my company last year around August, and I am an LLC with me being the only employee, so I am the owner. I provide personal training services, some people pay per session, and sometimes I get paid in bulk packages for a few months. I do not understand what is meant when I ‘pay myself’ When money comes in, it goes to my business bank account, and then when I need it, I transfer it to my personal checking account. So when I receive my first PPP amount of 5,500, can I just transfer it to checking and use it for whatever I want? In essence, this is 100 percent free money that I will not need to pay back? Thanks so much for your help!

  97. Hi Rich , the forgiveness rules for the ppp loan are changing rapidly on a day to day basis. is it possible that the sba will want documentation of taxes on your business for the 2021 year? and is it possible that you would have to pay back taxes on your business based off the information that was used to apply for the loan application? I applied through blue acorn and they make it impossible for you to get in contact with the lender that gave you the loan, His name is on my docusign agreements but no email to reach nor business number .

    Thank You.

    1. The forgiveness is based on the information you filed with the IRS in the tax year you used to apply.

  98. Hi Rich, I was wondering if you have advice or can provide a resource for how to record the PPP loan deposits and withdrawals in quickbooks. I received both loans in April and transferred the money into separate accounts as you recommended. Now I’m balancing my April statement and want to make sure I record both deposits and withdrawals properly. All the tutorials out there I’ve found so far don’t account for moving the money to a separate account so I’m a little confused how to record them.

    1. Running the PPP through payroll or accounting software is tricky. I’d label it as funds outside the business for your own records because it’s not “payroll” nor will it be taxable income. You can also ask your CPA because they should be more familiar with all the systems–QuickBooks, ADP, Gusto, etc.

  99. My Schedule C was only $75,000 , yet i received $20,832 . should i return the money that was over payed to me and start a new application ? im not sure what i should do. Please help.

  100. When we apply for PPP loan Forgiveness. Which bank statements are we showing ? Is it where the ppp loan was deposited to or the new account ? Cause you said once the ppp loan is deposited to your bank account, transfer the whole thing to the new account then make 10 weeks transfer back to the account where the ppp loan was originally deposited to…
    Or are we showing both bank accounts statements ?

      1. Hi Rich,
        here’s my question on this topic. I received both my PPP loans (first & second draws) of each being $6403.00. I went off of my 2019 scheduled C. The money was deposited into my personal acct. In the middle of 2020, I opened up a new business being a single member LLC. with a business acct. I deposited the PPP money in my business acct from my personal acct. So, can I just open up a new personal or savings acct and transfer the PPP money from my business acct into the new personal acct? And then transfer weekly payments back into business acct or the original personal acct that was the original deposit of the PPP? … and if I need to transfer the money to the orig acct.. I can then transfer the money back into my business and use how I want? Basically do I need to do a full circle of depositing and transfers? Or can it be now from business acct to newly opened acct.. then back to my business ( which is my business name on the acct, not my personal name)? Hope all this makes sense. I transferred that PPP money into my business acct because I didn’t want to use it for personal reasons. My new business needs it!

  101. Can I apply for loan Forgiveness for the 1st draw ppp loan after the 10 weeks or do I have to wait for my second draw ppp loan to be exhausted for 10 weeks too before applying for ppp loan Forgiveness for the 1st draw?

    1. You can apply for forgiveness as soon as you’ve used up all the funds. After 10 weeks works, but you have 10 months.

  102. It’s impossible to get ahold of my states Unemployment office i am currently recieving state unemployment as well as the pua payments and it’s just not enough with all the things going i am also a delivery driver for grubhub which gives a 1099 i haven’t been able to do work for grubhub or my job so i applied for ppp and did the DocuSign today it’s not a crazy amount but still decent at 4687.00 so if i pay myself 468.07 cents over ten weeks and my states unemployment asks if i made over 504.00 would i click no to that and be able to continue using both programs i know what you have mentioned about double dipping but I’m at the end of the road here and need the money so can i use both or should i bail on one program so i won’t get into trouble

    1. It all depends on your states unemployment office rules. Some states say you must report it, but others say nothing because it’s not taxable income.

  103. Hi Rich,
    Hope all is well. I had a question when I received my money I pay myself $2000 without knowing that I should have had pay myself $1000, will this be in issue? I had also another question can I pay Rent ,light and water with the PPP loan?

  104. Marisol Thomas

    Hi Rich, thanks a lot for taking the time to share your knowledge on this (there’s so much out there but some of it is very conflicting). I have a question about the bank statements that I’ll have to provide when applying for forgiveness. I am self-employed and received approval for $20883. I plan on paying myself the way you suggested (I have no employees), which is in equal amounts over the course of 10 weeks. Do you think they’ll want to see that I used the funds for business related expenses AFTER I pay myself? What if I don’t immediately use the funds after I pay myself? Could this be an issue? I mean, I’ll be able to show that I used the full amount to pay myself (i.e transfers to my personal account); however, it’s not clear to me if I’ll have to show that I used the money for business expenses once it hits my personal account. Thanks!

  105. So i just received by ppp loan.I have no employees and iam a sole proprietor of my company. When i did the loan i opened a seperate acct for the funds to get deposited, now that i have the funds i see i have to pay myself. So can i pay myself and send the money to my personal acct that i already had or do i need to open a different acct. And then to pay myself, i take the loan amount and divide it by 10 correct.. Please help kinda confused
    Thank you

  106. Hi Rich thanks for your help its appreciated!! Can I use the funds for employee payroll and to pay myself or does it have to be one or the other?

  107. Hi Rich,

    I plan to receive my ppp loan funds soon and i want to make sure im clear on how to pay myself. The loan is through Blue Acorn and im receiving the exact amount i should for the 2.5 months payroll.
    Now i see you recommend opening a separate account transferring the entire amount yo the “ppp” account.
    Then im confused of what to do from there. Do i have to pay myself BACK to the original personal account it was funded to on a weekly basis? Or do i just make the one transfer. Note it as “payroll” then im free to spend how i like? Or do i have to let it sit for 8 weeks?? 🤔

    1. After you make the initial transfer to setup the “PPP” account. You make 10 transfers back to yourself. This creates two types of crystal clear documentation.

  108. Aimye Cossairt

    I am about to receive my first ppp loan funding. I was approved for $20,232 which is scheduled to be deposited into my savings account. I am sooo confused…I am an independent contractor (Uber/DoorDash/Grubhub)

    When my funds are deposited, since I can use it all for Owner Compensation, do I transfer
    $2023. 20 to my checking account per week for 10 weeks?

    Please advice…I’m so lost 😞

      1. When it comes to forgiveness, How would a Uber/Lyft driver get approved for +$20,000 wouldn’t you have to make show you made 100K/ur to be approved for that amount??

  109. Aimye Cossairt

    Please advise again to clarify…I’ve read others questions and you replies. So when I get my loan funded in my saving account, I open a new checking account specifically for my ppp loan, transfer the entire amount to my checking and then weekly disperse the loan amount divided by 10 weeks weekly back to my saving account??

    Kind of confused

  110. Hi Rich, The financial institution sent me an email saying I could apply for forgiveness as soon as 8 weeks after disbursement. Following your process I’m on week 8 of 10 for my PPP 1. Do you suggest I apply now or should I wait two more weeks until all funds have been used?
    Also, what form (Form 3508, 3508EZ, or 3508S) to fill out? do you have info/video on this? fyi, I’m a sole-proprietor.

    Thank you in advance for your help!

  111. Hello Rich,
    I’m Gig worker who is working as a full time for Uber/Lyft and Doordash.
    I got second round ppp loan around 17,500$ on March 27th 2021 based on my gross income which is 84,400$ . But my net income is 9000$

    So my question is can i pay to my self for ppp forgiveness now? Because i will choose 24 weeks for using loan. And i do have 2 checking account. Should i deposit money to my other account every week? Or i need write check? My both all checking account is personal account. I don’t have a any ein number

    1. I’d check to make sure your numbers are correct, then make the 10 transfers based on those correct numbers.

      1. Thanks for answering. As of today, I started transferring money to my other checking account. The other question I would like to ask you is that Loan fund deposited into my account on the April 1th 2021 . So 11 weeks ago. Don’t you think it’s too late if I start sending money to my other account from today? Is it okay if I start this process 11 weeks after receiving the money?

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