As of today, self-employed workers and independent contractors affected by the coronavirus pandemic are technically eligible for reimbursable federal loans to help them cover certain costs, but be forewarned: the roll-out of the program has not gone ahead. not exactly smoothly so far.
The paycheck protection program, part of the $ 2 trillion economic stimulus package signed last month, has allocated $ 349 billion to small businesses affected by COVID-19. Applications went online a week ago (Friday April 3) and as of today (Friday April 10), self-employed workers and independent contractors can apply.
The program is facilitated by the Small Business Administration, which has unfortunately been inundated with requests and inquiries since the start of the pandemic, so much so that companies have complained that the agency has not responded and inconsistent in its messages. Banks and other potential lenders have also struggled to comply with the P3, with some initially claiming that they have not received the proper advice from the federal government.
In other words, it is a huge mess, a “bureaucratic train wreck”, as one senator described it. Here’s what self-employed workers and independent contractors need to know:
- When and where can I apply? Today, supposedly! The PPP says self-employed workers 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? Salary costs (including benefits), rent, mortgage interest and utilities over an eight week period. For a sole proprietor or independent contractor, this means salaries, commissions, income or self-employment income (up to $ 100,000 per year for each employee).
- Do I have to repay the loan? Maybe not. As long as you’re using most of the money on salary costs, you should be fine. More details here.
- How can I get started? First, complete the application (which you can find on the SBA’s website) and then submit it to an eligible lender.
- How long will it take? Not clear! The SBA, the lenders and basically everyone involved in providing personal loans seem to be completely overwhelmed by the volume of applications. With luck, the sooner you start, the better off you will be.
- Small print? You can find the terms and conditions here.
To reach: Are you a small business owner or self-employed person struggling to get relief through SBA loan programs? I would love to hear about your experience. Email me at [email protected]