Can a sole proprietor with a Keogh Plan make a contribution even though there is a loss in the business? Can he make a contribution for his employees?

You can contribute to your employees who are eligible for the Keogh plan. Look at the rules in your adoption agreement, and talk with your pension provider to get more info on the eligibility rules. If you contribute, the cost for employees will be deducted on 1040 schedule C.

Your contribution would not be deductible even if required, since the owner's pension contribution cannot cause a sole proprietor's busines to go into a tax loss.