Starting today, April 10 2020, independent contractors and self-employed individuals can apply for the Paycheck Protection Program (PPP), part of the government’s Covid-19 stimulus.
⚠️ There is lots of talk out there about “free money” or “forgivable loans” — which is frankly dangerous if you don’t have the full information, so we want to be clear: For 99% of independent contractors, this loan will not be forgiven — you will need to pay it back, just like any other loan.
Paycheck Protection Program (PPP) Key Points:
As an independent contractor, you can receive a loan through this program. It has relatively good terms (1%, 2 years) but it’s still a loan that needs to be paid back.
What about the talk about the loan being forgivable? Here’s the short of it: The loan is not easily forgivable for independent contractors and the self-employed.
If you’d like to explore this loan, we’d recommend that you see it as a loan that needs to be paid back.
Why is the loan unlikely to be forgiven for self-employed?
The loan is only forgivable if you follow strict requirements which are very hard for self-employed people to do, or frankly, not even clear in the law how it can be done.
(For example, it’s not clear if a self-employed person paying themselves is considered payroll.)
The requirements include that the “intent” of the loan is to:
Keep employees on payroll
Rehire employees you laid off,
Pay for specific expenses like office rent, utilities and interest
You’re also required to keep very detailed business records, e.g. cash flow and profit & loss statements that most self-employed people to do not keep. If you’d like to explore this, you should consult with a trusted tax professional.
Everlance does not give loan or tax advice. Please consult with your local lender or tax professional.
Team Everlance
We help people save time and money. At Everlance, we're on a mission to empower mobile workers and businesses. That sometimes leads us to generalize tax information. Everlance team members are not certified tax professionals. If you need help with your specific tax situation, please reach out to your tax advisor.
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