Starting today, self-employed workers and independent contractors affected by the coronavirus pandemic are technically eligible to qualify for forgivable federal loans to help them cover certain costs, but be forewarned: The rollout of the program has not exactly gone smoothly so far.
The Paycheck Protection Program, which is part of the $2 trillion economic stimulus signed into law last month, allocated $349 billion for small businesses hurt by COVID-19. Applications went live a week ago (Friday, April 3), and as of today (Friday, April 10) self-employed individuals and independent contractors can apply.
The program is facilitated through the Small Business Administration, which unfortunately has been inundated with applications and inquiries since the pandemic began, so much so that businesses have complained that the agency has been unresponsive and inconsistent in its messaging. Banks and other would-be lenders have also been scrambling to comply with the PPP, with some initially saying they had not received the proper guidance from the federal government.
In other words, it’s been one giant hot mess—a “bureaucratic train wreck,” as one senator described it. Here’s what self-employed individuals and independent contractors need to know:
- When and where can I apply? Today, supposedly! The PPP says self-employed individuals and independent contractors can start applying on April 10. You can apply through an SBA lender, a federally insured credit union, or a participating Farm Credit System institution. The SBA has a searchable database of approved lenders here.
- What can I use these loans for? Payroll costs (including benefits), rent, mortgage interest, and utilities over an eight-week period. For a sole proprietor or independent contractor, that means wages, commissions, income, or earnings from self-employment ($100,000 a year max for each employee).
- Do I have to pay the loan back? Maybe not. As long as you use most of the money on payroll costs, you should be okay. More details here.
- How do I get started? Start by filling out the application (which you can find on the SBA’s website) and then taking it to an eligible lender.
- How long will this take? Unclear! The SBA, lenders, and basically everyone involved in getting the loans out to people appear to be completely overwhelmed by the volume of applications. With luck, the sooner you get started, the better off you’ll be.
- Fine print? You can find the terms and conditions here.
Reach out: Are you a small business owner or self-employed individual who is having trouble obtaining relief through the SBA loan programs? I’d love to hear about your experience. Email me at email@example.com.