Independent contractors, self-employed, and sole proprietors are now able to apply for Paycheck Protection Program loans available from the CARES Act. While most small businesses were able to apply for a Paycheck Protection Program loan starting April 3rd, this option opened up for the others (including those that receive a 1099) on April 10th.
These PPP loans may be forgiven if borrowers maintain their payrolls during the crisis or restore their payrolls afterward. There is, of course, a limit to the amount that can be borrowed and forgiven.
Check out this short video on 3 things self-employed people need to know about applying for a PPP loan with Keith Hall, President & CEO of the National Association for the Self-Employed. This video is part of a National Small Business Town Hall from Inc. and the US Chamber of Commerce.
The Coronavirus Emergency Loans Small Business Guide and Checklist prepared by the US Chamber of Commerce was updated April 9th with additional details on the PPP loans.
FAQ for Paycheck Protection Program loans in guide include:
- Am I eligible? Probably!
- What will lenders be looking for? If you fall into the category of an independent contractor, self-employed or sole proprietor, PPP lenders will be looking for certain documents such as payroll tax filings, Forms 1099-MISC, and income and expenses from the sole proprietorship.
- How much can I borrow, how to calculate payroll costs, and what payroll costs are excluded? Included payroll costs for sole proprietors, independent contractors, and self-employed individuals is net income not more than $100,000 in one year. See the guide for more details on included and excluded payroll costs.
- Will this loan be forgiven and if so, how much of it? It might be! But you MUST meet the criteria.
The small business checklist and guide on PPP loans also includes guidance for seasonal and non-seasonal employers, plus where to find a PPP lender.
While the program is open until June 30, 2020, the government is advising borrowers to apply as soon as possible given the loan cap on the program.
On April 14th, The Treasury released this additional guidance on the Paycheck Protection Program loans for individuals with self-employment income who file a Form 1040, Schedule C.
Check out our COVID-19 resource page for more blog posts, videos and helpful information for businesses during the Coronavirus pandemic.