Why find a loan or grant? Because you never know when your customers cant pay you.
Whether your a restaurant owner, IT Consultant, Technical Trainer, Uber Driver or other “gig economy” worker your likely going to dealing with revenue issues. (If not already) With the fiasco that the recents have caused chances are that if your a small business, independent consultant or trainer your likely experiencing drops in revenue or will be shortly. Its becoming clear that the rulers of the world will continue this somewhat longer. States already have shutdown school for the year and airlines have announced routes are dead until June or later. Congress is already trying to pass more relief bills so I think the cards have been laid out there for those looking.
There are some very interesting and hopefully resources to help small businesses, consultants (1099/C2C) and even employees during this unprcedented economic upheaval.
Below I have compiled the top five resources to obtain funding or relief either by tax rebates, loans or grants.
1. Economic Injury Disaster Loans & Advance (Loan and Grants)
Perhaps the simplist and easiest form out their is from the Small Business Administration.
Small Business/Self-employed with or without employees qualify. You can apply for sba loan and elect for 10,000 “loan advance” which is now considered a grant (Surprisingly).
Basic Information below
- 3.75% for Small Businesses
- 2.75% for Non profits
- Application is simple and easy
Here is my Youtube video going over the process.
I am waiting to see how the Loan/grant work out.
2. Paycheck Protection Program (PPP) by the US Treasury
It would appear that self-employed pay (net income) qualifies per the Cares Act Sec. 1102 A (2) (36). Below are the inclusions.
‘‘(ii) INCLUSION OF SOLE PROPRI2 ETORS, INDEPENDENT CONTRACTORS, AND 3 ELIGIBLE SELF-EMPLOYED INDIVID4 UALS.—‘‘(I) IN GENERAL.—During the covered period, individuals who oper7 ate under a sole proprietorship or as an independent contractor and eligible self-employed individuals shall be eli10 gible to receive a covered loan. ‘
‘(II) DOCUMENTATION.—An eli12 gible self-employed individual, inde13 pendent contractor, or sole proprietor14 ship seeking a covered loan shall sub15 mit such documentation as is nec16 essary to establish such individual as eligible, including payroll tax filings reported to the Internal Revenue Service, Forms 1099–MISC, and in20 come and expenses from the sole pro21 prietorship, as determined by the Ad22 ministrator and the Secretary.
Below is the direct link for the US Treasury fact sheet
How the PPP would work and what it covers.
Covered Period: Feb 15 – June 31 2020
(Note below this appears to work in Phases..)
- Loan can be forgiven so long as at least 75% of costs go to payroll (25% can go to other fixed business expenses)
- Payroll for the 1099/self employed = Business net income (Income minus expenses)
- You should consider any employees & 1099/CC contractors separately
- Must submit paperwork as instructed for forgiveness relief
- .5% interest, automatically deferred payments 6 months (if not forgiven)
How to Apply for this.
First check you bank. I know that BBT is still getting this worked out.
For example, my past SBA lender has this on the website
We are not yet accepting applications for Paycheck Protection Program. We are awaiting release of additional program guidelines from the SBA
Here is the Treasury information and application.
- Businesses with actual employees can already apply (April 3rd)
- Businesses without employees (1009 contractors/self-employed) April 10th
3. State Unemployment Insurance (Cares Act Support)
The CARES Act actually now expands unemployment to include self employed and even parents who stay home from work to school the children. You do not need to have paid into UE before.
I am in Florida and still can not get thru. But it would appear that you could eligble for both State and the Federal paid $600 per week benefits that are covered by Washington (You the tax payer). You definately need to check your state though about how they would work.
Check your states UE office for more information. Unless, your in Florida and you wont be able to access the site since they are being slammed.
4. IRS Stimulus checks/Refunds
Supposedly, these may be coming. With that said it depends on what you income was in 2018 is and what your status is (Married/Single/#Kids)
The benefit amount depends on several factors. Here is whats known.
- $1200 (single) & $2400 (married)
- $500 per child dependent
- Limited by 2018 Tax Return Income 75,000 (S) or 150,000 (M)
- IRS will update this site https://www.irs.gov/coronavirus
5. City/State Grants and Loans
Chances are that if your a business you could find some type of local loan available. I know in Jacksonville, FL there are a good amount of programs and I am still sifting thru them.
The main challenge with these loans is that they are geared more to businesses with a larger employee base. However, there are some with less than five employees..
Lastly, the SBDC has awesome resources listed here.
I hope this helps some folks. Please reach out and let me know how these turn out.
Lastly, I know the SBA Is working. They paid off a previous loan and I was notified last week.
Be a bit patient, its the government running the programs..