Lenders on PPP applications call these "Entity types" without further defining this term. However, best to my knowledge:

  1. Sole proprietor is someone who owns 100% of business and files Schedule C together with 1040 form. This choice relates to Tax Filing Status with IRS.

  2. Partnership is when multiple people own business in equal amounts and file form 1065. This choice relates to Tax Filing status with IRS

  3. Independent contractor is someone who could be either Sole proprietor or Partnership. But focuses mostly on B2B work that implies that Independent Contractor is receiving 1099-MISC form from his clients as transactions are with other businesses (Opposed to B2C type of work where businesses are not getting 1099-MISC form from clients that are consumers). This choice relates to transaction types.

  4. Self-employed is someone who owns and runs his own business - in other words anyone who is not employee. This could either be partnership or sole proprietorship. This choice relates to work management type.

It seems that answers from different classes are mixed together hence there are multiple correct answers.

  • And an option for LLC. A person with a single-member LLC is a sole proprietor, self-employed, and LLC owner. I checked LLC. Later steps in the application are the same so my understanding is that it doesn't matter which one you check.
    – minou
    Commented Mar 8, 2021 at 13:49

1 Answer 1


If you look at the SBA’s “How to Calculate Maximum Loan Amounts” document, you’ll see that the first two questions apply to self-employed, independent contractor, or sole proprietorship (but not partnership). I suspect that all three of these choices are identical on the PPP loan application.

People are often confused about what type of business they have, and we see that confusion here on Money.SE all the time. People will sometimes refer to themselves as a “1099 employee” or “self-employed,” and do not seem to fully grasp the concept that they are running their own business. My guess is that the SBA decided to add a few extra choices to the top of the PPP loan application just to give people some extra options and describe themselves in a way that they are comfortable with, and make sure that someone who is self-employed with no employees who does not necessarily get a “paycheck” feels welcome to apply for the Paycheck Protection Program loan.

  • Frankly, SBA adding few more extra choices has actually caused the opposite effect, at least for me. Especially since most lenders quietly reject application without explaining the reason and not leaving email address where to find out the reason. So you are left wondering if maybe you picked the wrong "entity type". Commented Mar 8, 2021 at 17:42

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