No. While you can receive both unemployment benefits and Paycheck Protection Program loans, note that you cannot get both at the same time. The PPP, as the title suggests, was intended to keep workers employed.

If you obtain a PPP loan, you will be expected to disclose the money you are given as income to your state’s unemployment office. You will most likely be disqualified for unemployment as a result of this. If your business is still closed after you have spent your PPP, you may be forced to return to unemployment.

The CARES Act modified many Items for self-employed individuals and small business owners. It established the Paycheck Protection Program (PPP) and increased unemployment benefits through Pandemic Unemployment Assistance (PUA) and Federal Pandemic Unemployment Compensation (FPUCC) (FPUA).

The PPP provides loans to small enterprises that are 2.5 times their monthly payroll costs. If you utilize at least 60% of the loan for payroll expenditures, it becomes a grant that enterprises do not have to reimburse. Self-employed individuals and independent contractors are as of now able to receive unemployment benefits through the Pandemic Unemployment Assistance (PUA) program.

Self-employed people and independent contractors are eligible for unemployment benefits, which have been increased by $600 per week for 13 weeks. But unlike PPP, the EIDL grant can be combined with unemployment as long as it is not used to pay oneself.

Paycheck Protection Program Vs. Unemployment as a Sole Proprietor

As a sole proprietor, you can apply for either the PPP or unemployment benefits (but not both). Here are some things to consider before you send in your application.

  1. How much will you be paid?

Both the PPP and unemployment provide major benefits, but which will provide you the most funds? You should do some studies and basic arithmetic to determine what will put you in the perfect situation. The PUA minimum benefit is 50% of the state’s average weekly UI benefit.

In New York, for instance, the highest benefit rate is $504, which is the same as the highest benefit rate for routine unemployment benefits. Because unemployment benefits have always been taxable income, you might also consider how much state and federal tax will be levied on your funds.

  1. Will you still be required to work?

If you have any work coming in and the potential to make a little money in the coming months, the PPP might be a wiser choice. Working and garnering income will have no effect on the sum you obtain from the PPP, and you will still be capable of receiving 2.5 times your monthly payroll cost.

However, if you are obtaining unemployment benefits and continue to work part-time, your benefits may be whittled down. As a result, consult your state agency to figure out how much your unemployment check would be whittled down if you continue to work.

  1. Having PPP as well as receiving PUA

You can take advantage of both programs, but not at the same period. If you’re currently receiving unemployment benefits and hold a PPP loan from which you are trying to claim owner compensation replacement, you must disclose your PPP loan to your state’s unemployment resource

Paycheck Protection Program vs. Unemployment As A Business Owner

If you have workers, deciding whether to file for PPP or lay them off to enable them to collect unemployment benefits becomes slightly more confusing. Questions you can as include;

  1. Will you need to quickly ramp up your business?

If you believe your company will be able to scale up pretty fast once the shelter-in-place period comes to an end, retaining workers on the payroll can allow your organization to get off to a faster start.

You won’t have to re-hire and re-train employees, and you can bring your business up to speed quickly. As a result, your workers will not be required to submit for unemployment or search for a new job. They’ll be waiting for you when your doors reopen.

  1. Do you have any small projects that your workers can assist with?

Although the shelter-in-place order is still in effect, your workers can be able to assist with minor tasks. What projects have you not completed yet which might benefit your firm in the long run? This could include making a sustainable website, creating an email list, or developing innovative items to sell once the business reopens. Using the PPP, you can have your workers assist you in crossing items off your to-do list.

  1. Do you provide health insurance coverage?

Even when you offer health insurance to your workers, the PPP will factor health insurance costs into the loan calculation.

Keeping workers on the payroll allows them to retain their health insurance perks, which is extremely crucial in a global health emergency. If you fire your workers just so that they can obtain unemployment benefits, they will be responsible for paying for their own health care coverage.

  1. Can you use some assistance with your rent and utility bills?

If you already have mortgage and utility bills to pay, the PPP enables you to utilize a fraction of your earnings to cover those expenses. So, in addition to receiving revenue to cover workers for 24 weeks, you may also receive resources to pay for other expenditures. If you decide to lay off workers rather than use the PPP, you will not receive the additional income.

  1. Do you intend to relaunch your company?

If you do not believe that your firm will ever rebound, you’re likely better off laying off workers and functioning to decompress your operations instead of applying for PPP. Applying for PPP will only exacerbate the situation, allowing you and your workers to focus on what comes next.


You can receive funds from either the PPP or unemployment, but never both. If you need assistance with certain costs, the PPP is a wiser choice than unemployment. To be forgiven, 60% of the PPP must be allocated to payroll, and the remaining 40% can be utilized for lease, utility costs, employer and worker health insurance, expenditure, operational expenses, and destruction of infrastructure.