COVID-19 stimulus for consultants, contractors, agents (BIG PPP RULE CHANGE)

In this 5-minute read:

• Paycheck Protection Program (NEW RULES/BENEFIT/APPLICATION FOR SCHEDULE C FILERS!)
• Pandemic Unemployment Assistance (PUA) benefits
• SBA Economic Injury Disaster Loan (EIDL)

It’s clear that the effects of the COVID-19 pandemic are lasting longer than expected, and we’re likely still months away from any sort of “normality.” Several states are still partially “locked down” and small businesses across the country continue to face the uncertainty and economic challenges brought by the pandemic. 

This is also why another round of the Paycheck Protection Program (PPP) funding was approved in late December 2020, granting small business owners, independent contractors, and self-employed individuals the opportunity to help their businesses through this financial trial. 

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What stimulus programs are available to consultants, agents, and other independent contractors to help them survive the COVID-19 financial crisis?

With small businesses being hit hard, independent contractors—especially those working for other small businesses—have perhaps taken the largest financial hit during the pandemic. More assistance is being offered to those in truly small businesses and independent contractor positions as the pandemic continues. 

Paycheck Protection Program (PPP) Loans

The PPP loan is a program afforded to help small businesses through the financial struggles of COVID-19. Over 5 million small businesses received PPP loans in 2020 and more continue to receive their loans in 2021. 

The great thing about PPP loans is that they can be completely forgiven if you meet the requirements set within the loan. Learn more about PPP loan forgiveness. 

Most independent contractors are eligible to apply for PPP loans. Whether you are a consultant, some kind of agent, freelance content creator, truck driver, Uber or Lyft driver, or any number of positions that files a 1099/1040 including Schedule C, you can likely receive PPP loans to help through this difficult time.

The Paycheck Protection Program was reopened in January 2021 with more funding, and an increased emphasis on underserved and truly small and applications will be accepted until May 31, 2021. 

As of February 22, 2021, even more changes to the PPP program have been announced in order to help these smallest businesses, especially independent contractors and sole proprietors. Those changes include:

• Applicants using form 1040, Schedule C to apply for their PPP loan with be able to use their gross profits (instead of net) to calculate their max PPP loan amounts
• Applicants with student loan debt delinquency will now be included—previously businesses with 20% or more owners who were delinquent on student debt could not receive a PPP loan

Learn more about the most recent PPP changes: Major changes coming to PPP! Updates to help smallest businesses for 2021 See the new rules and the new PPP application form for Schedule C applicants.

PPP loan resources for independent contractors and self-employed individuals:

• Can I get a PPP Loan if I’m an independent contractor? | PPP FAQ
• Can I get a Second Draw PPP if I’m a 1099 worker, etc.? | PPP FAQ
• Can real estate agents apply for PPP?
• Can you get more than one PPP loan?
• PPP for gig workers 2021

Pandemic Unemployment Assistance (PUA) 

The CARES Act gives states the option to grant unemployment assistance to self-employed individuals and independent contractors where they have been previously ineligible. 

PUA provides unemployment benefits to those who became unemployed because of COVID-19. It is not a wage replacement program, though, and for individuals to receive this assistance, they must be unemployed or partially employed. They can’t be working full-time with reduced earnings (if that’s your situation, then you should apply for the other programs mentioned in this article). 

According to the Department of Labor, “An individual who works as an independent contractor with reportable income also may qualify for PUA benefits if he or she is unemployed, partially employed, or unable or unavailable to work because the COVID-19 public health emergency has severely limited his or her ability to continue performing his or her customary work activities, and has thereby forced the individual to suspend such activities.”

PUA started in March 2020 with the CARES Act with an original expiration date of December 26, 2020. On December 27, 2020, the stimulus bill renewed the PUA, granting eligible persons an additional 11 weeks to apply for unemployment assistance. 

PUA grants the same benefits as your state’s regular unemployment programs, but the funds are federally funded. To apply for assistance, find your state’s unemployment office and follow their instructions for application. 

SBA Economic Injury Disaster Loans (EIDL)

EIDL loans and grants have been available to small businesses, including independent contractors and self-employed individuals. Through 2020, the EIDL program also provided a forgivable advance up to $10,000 ($1,000 per employee). The advance funds are currently fully allocated and unavailable, and the SBA is reaching out to eligible businesses who applied in 2020 but were un- or under-funded. Learn more about EIDL loans and grants, and check back for word on when the application window may be reopened. However you may still apply for standard EIDL loans.

The EIDL loan amount is determined based on 6 months of operating expenses (capped at $2 million) and the rate is 3.75% for an up-to-30-year term. 

Important note: If you also received (or will receive) a PPP loan, your EIDL and PPP loan cannot be used for the same purposes. 

To learn more about the EIDL program and disaster loans through the SBA, visit www.sba.gov.

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