GIG Economy Workers and Independent Contractors are Eligible for Forgivable SBA Loans Starting on April 10,2020
Through the recently-enacted Payroll Protection Program (“PPP”), workers in the gig economy, such as Uber or Lyft drivers and Instacart or DoorDash shoppers, along with independent contractors and freelancers, are eligible to apply for forgivable loans from the Small Business Administration, starting on April 10, 2020.
The PPP authorizes up to $349 billion in forgivable loans to small businesses to pay their employees during the COVID-19 crisis. It also authorizes loans to gig workers and independent contractors who have lost income as a result of the COVID-19 pandemic.
WHEN DO I APPLY?
Gig workers and independent contractors can submit applications starting on April 10, 2020.
The loans will be issued on a first-come, first-served basis, so it is incredibly important that you take action now.
HOW DO I APPLY?
To obtain a loan, you must complete the loan application and submit it along with your supporting documentation to your bank or credit union. Before April 10, 2020, you should complete the application and contact your bank or credit union to learn what other steps or documentation may be needed to process your application.
Click HERE for the Application.
HOW MUCH CAN I BORROW?
Loans can be for up to two months of your average monthly payroll costs from the last year plus an additional 25% of that amount.
DO I HAVE TO PAY THE LOAN BACK?
The loan amounts will be forgiven as long as (1) the loan proceeds are used to cover payroll costs, and most mortgage interest, rent, and utility costs over the eight-week period after the loan is made, and (2) employers do not fire employees or significantly reduce compensation levels.
“Payroll costs” for gig workers and independent contractors includes wages, commissions, income, or net earnings from self-employment.
To request loan forgiveness, you submit a request to the lender that is servicing the loan. The request will include documents that verify the number of full-time equivalent employees and pay rates, as well as the payments on eligible mortgage, lease, and utility obligations. You must certify that the documents are true and that you used the forgiveness amount to keep employees and make eligible mortgage interest, rent, and utility payments. The lender must make a decision on the forgiveness within 60 days.
WHAT IF I END UP HAVING TO PAY THE LOAN BACK?
If your lender does not forgive the loan, you will pay a 0.50% fixed interest rate. All payments are deferred for six months; however, interest will continue to accrue over this period. If not forgiven, your loan will be due in two years.
If you are a gig worker or independent contractor and have any questions about the PPP or the application process for an SBA forgivable loan, please contact us at Bernabei & Kabat.