© 2020 Forbes Media LLC. See all articles by Richard Harroch. You may opt-out by. account and we’ll keep you updated on new funding opportunities. For full details on how you should spend your PPP loan, go here. Customer relationships thrive when local businesses and consumers are connected through Womply data and technology. He was also a corporate and M&A partner at the law firm of Orrick, with experience in startups, mergers and acquisitions, and venture capital. A 1099 independent contractor is a subcontractor–not an employee. SBA will consider the totality of the circumstances, including criteria used by the IRS for Federal income tax purposes, in determining … For example, the Northern California SBDC has been extremely helpful, and you can actually talk to a person live (see www.asksbdc.com or call 833-ASK-SBDC). If you don’t have this number, talk to your lender. Learn more, plus get free reputation monitoring and customer insights when you sign up for Womply Free! Benefits of remarketing for salons How to set up your salon’s remarketing campaign […], In this 6-minute read: What is swag and why use it? A loan for favorable terms from the SBA may also be available. Are you unsure if the non-traditional employees you’ve hired count towards payroll for the Paycheck Protection Program (PPP) loans? Opinions expressed by Forbes Contributors are their own. This also means that if you use your PPP loan funds to pay yourself and for other approved expenses and apply for loan forgiveness with the appropriate documentation, you won’t have to pay your PPP loan back. He has been involved in over 200 M&A transactions and 500 start-ups. This means that independent contractors… Please read the full details here. For your business phone number, it’s okay to give your cell number. Or are you owner-operators of a mom-and-pop shop with no other employees? You must add your Social Security number if you are applying as an individual independent contractor, freelancer, or gig worker. Any business concern, nonprofit organization, veteran’s organization, or Tribal business concern that employs no more than 500 employees (or the size standard in number of employees established by the Administration for the industry in which such business operates) Sole proprietors; Independent contractors; Self-employed individuals The reason for this is that independent contractors are self-employed and, thus, can apply for their own PPP loans (as of April 10, 2020) to cover the pay they would have received and other expenses. No. Click here for the full PPP loan forgiveness application, Click here for the new Form 3508EZ application, If you don’t fit into any of the above conditions, you will need to complete and submit the full. But now the SBA has lifted the suspension because of legislation passed on April 24, 2020, that allocated another $60 billion for EIDL and grants thereunder. An employee is any member of your company that receives compensation through your payroll, with the exception of independent contractors (more on this shortly). (a) In determining a concern's number of employees, SBA counts all individuals employed on a full-time, part-time, or other basis. You can still pay them with your loan, as they qualify as a legitimate expense, but that portion you spend will not qualify for loan forgiveness if it is used to pay independent contractors. You may use Form 3508EZ if: If you don’t fit into any of the above conditions, you will need to complete and submit the full PPP loan forgiveness application. Don’t include the check number (1234 on the image below). PPP Loan Amount: This should be the total loan amount you received from the Lender. The form will ask you for the gross revenues for the last 12 months for your independent contractor business and the “cost of goods sold.” You can estimate this based on what happened in 2019. Sole proprietorships, with or without employees; Independent contractors; Business entities with 500 or fewer employees; Cooperatives and employee-owned businesses Therefore, they don’t qualify for small business loans from the SBA. Independent contractors and sole proprietors do not count as their own employees, and consequently would get nothing rather than the $10,000 promised. The SBA sometimes refers to these grants as “advances,” but you are not required to repay this money to the government. Lender PPP Loan Number: Ask your lender for the number they assigned to the PPP loan. This is also capped at $100,000 on an annualized basis for each individual. The first grants took over a month to be issued; hopefully, newer grants will be quicker. For more information on PPP loans generally go here. … Here’s how borrowers decide which forgiveness application to use. Please read the full details here. To qualify for a PPP Loan as a sole-proprietor, your business must have been in operation since February 15th, 2020. Similar to traditional employers, independent contractors can receive loans and use them toward their own payroll costs (meaning to pay themselves). The extended deadline for application is August 8, 2020. What to do before you start Complete how-to guide for setting up your […]. There are even some lenders who offer independent contractor loans to immigrants and visa holders. Nonprofit organizations may now be eligible. On the first question, check the third box as you are applying as an independent contractor or sole proprietorship. If the current guidance from the SBA is taken literally, then it will be IMPOSSIBLE for ANY sole proprietor (with no employees) who has maxed out the 100,000 net earnings capped–and, based on that, received 2.5x MONTHLY income loan amount of $20,833–to qualify for loan forgiveness!! Under the CARES Act passed on March 27, 2020, independent contractors, gig workers, and freelancers affected by the coronavirus crisis are eligible to receive the grant. Borrowers are not required to make loan payments prior to their receipt of a decision on their loan forgiveness application, provided they the application is filed within 10 months of receipt of the loan. It will ask for the date the business was established. The Top 10 Frequently Asked Questions About CARES Act Loans, Small Business Relief: COVID-19 Resources for Startups, Newly Available CARES Act Loans: 10 Things Small Businesses Need to Know, Independent contractors (for whom there is expanded eligibility criteria), Sole proprietorships, with or without employees, Small businesses with less than 500 employees. You need the name of your bank, the account number (the middle number at the bottom of your checks), and the routing number (the number at the bottom left of your checks). You are an employee of your business, so you can use your loans to pay yourselves. You can ignore the question “If anyone assisted you in completing this application …” unless you have in fact gotten help. SBA PPP Loan Number: This is the SBA-assigned number provided to you at the time of loan approval. The reason for this is that independent contractors are self-employed and, thus, can apply for their own PPP loans (as of April 10, 2020) to cover the pay they would have received and other expenses. The U.S. Chamber of Commerce has issued this guide and cheat sheet to help independent contractors and self-employed individuals prepare to file for a loan from the CARES Act's Paycheck Protection Program (PPP) loans / grants, SBA's Economic Injury Disaster Loans (EIDL), and/or Unemployment Compensation for losses of income related to the coronavirus pandemic. On December 22, Congress passed a bill renewing funding under the CARES Act, including an additional $284 billion earmarked for America’s struggling small businesses. Direct deposit information is as follows: Be sure to include your routing number and account number, as seen in the example above. The SBA sometimes refers to these grants as “advances,” but you are not required to repay this money to the government. Your bank account number, which can be up to 17 characters. This number times 2.5 equals your PPP loan amount. $2T Stimulus Overview Covid-19 Loans: What You Need to Know About 1099 Workers New guidance clarifies that independent contractors do not count … This page is about PPP loans for 1099 independent contractors. Similar to traditional employers, independent contractors can receive loans and use them toward their own payroll costs (meaning to pay themselves). There is some uncertainty as to the amount available, but up to $150,000 or $2 million has been reported. On June 15, 2020, the SBA announced that it was again opening up its Economic Injury Disaster Loan (EIDL) grant and loan program. After it is completed and submitted, the SBA will give you a confirmation number, so keep a copy of that for any follow-up. click here to start your free application. The current form of the PPP loan application is geared towards corporate borrowers, as it requests "average monthly payroll," and then multiplies that sum by 2.5 to determine the eligible loan amount. Read more: How can I get my PPP loan forgiven? The form will ask for the bank account to which you want the grant money direct deposited. Advisors can help you with both the PPP loan process and the EIDL loans/grants as well as special programs in your state. Number of employees does not matter. We’ll go over what counts as an “employee” for your PPP loans and also discuss what you need to do to have your loan forgiven. Independent contractors, sole proprietors and the self-employed should talk to their local bank first and make sure they are an SBA-approved lender, or a 7(a) lender. and get access to our helpful customer service staff who will guide you through the process. There are many lenders who offer loans for independent contractors. When the form asks for your business name, just enter your individual name if you don’t have a business name. On June 15, 2020, the SBA announced that it was again opening up its Economic Injury Disaster Loan (EIDL) grant and loan program. How do I determine if I should include or exclude an independent contractor (i.e., a 1099 employee) from the employee pool? Background information from the SBA can be found at www.sba.gov/disaster-assistance/coronavirus-covid-19. Please start typing, and then choose your business from the dropdown. You also must meet qualifications to receive PPP Loans. Just estimate if you don’t have the exact date, but make sure it was before January 31, 2020. Under the CARES Act passed on March 27, 2020, independent contractors, gig workers, and freelancers affected by the coronavirus crisis are eligible to receive a government grant of $1000. Payroll costs can include wages, commissions, income, or net earnings from self-employment. Similar to independent contractors, you are a sole proprietor and can use your PPP loan to cover wages, income, and net earnings for you as an individual, again capped at that $100,000 per employee in annual earnings. He can be reached through LinkedIn. ! If you are an independent contractor, freelancer, or gig worker, here are some tips on filling out the application: The form should take about 15 minutes to fill out. We recommend you read our full PPP loan FAQs here, or click here to start your free application and get access to our helpful customer service staff who will guide you through the process. On the sample check below, the routing number is 250250025. The SBA disaster loans and grants include the following eligible claimants: You must have been in business as of January 31, 2020. Starting Friday, self-employed and independent contractors are eligible to take advantage of Small Business Administration (SBA) loans, adding to the number … Click here for the Spanish version of the new Form 3508EZ. Independent Contractors and COVID-19 Richard is the author of several books on start-ups and entrepreneurship as well as the co-author of Poker for Dummies and a Wall Street Journal-bestselling book on small business. How to remarket on Facebook Step-by-step walkthrough for starting your remarketing campaign […], In this 8-minute read: What is remarketing? The SBA has been directly depositing the grant money into bank accounts without notifying people that the funds are on the way or have been deposited. Engage more customers with a pre-built, one page website. However, SBA will treat an independent contractor as an employee where there is evidence of an employee/employer relationship. It’s clear under the CARES Act that this is a grant that does not need to be repaid. By submitting this form you agree to Womply’s Terms of Service and Privacy Policy. Send discount, promotional, and transactional emails, automatically. All Rights Reserved, This is a BETA experience. count as employees under the Paycheck Protection Program. Small businesses and agricultural businesses also may apply for the grant, equal to $1,000 per employee of the business up to a maximum of $10,000. Sole proprietors, independent contractors and self-employed individuals with no employees can use the EZ loan application. But if the business owner already has an SBA emergency loan, it can be refinanced into the paycheck loan. Customer relationships thrive when local businesses and consumers are connected through Womply data and technology. Double-check that you have provided the correct numbers. To qualify for an EIDL, you must have been in business since January 31st, 2020. The Paycheck Protection Program, which officially opened for borrowers Friday morning, provides up to $10 million in forgivable loans to small businesses with 500 or fewer employees. Start the application. If you haven’t applied for your PPP emergency stimulus loan yet, there’s still time, but you have to act fast. First, let’s define what an “employee” means under the Paycheck Protection Program. This is the date you started doing freelance, gig work, or independent contractor work. Getting a personal loan is simple and easy, and with Stilt you can apply in 3 simple steps. Best swag ideas for auto businesses, repair shops, tire […], In this 6-minute read: Helpful tips to reassure restaurant customers Providing alternative dining and delivery options Keeping your customers informed […], In this 5-minute read: Why remarket on Facebook? That’s kind of obvious, isn’t it? MLM participants are considered independent contractors, not small businesses. The Treasury released a new IFR and an “easy” version of the PPP loan forgiveness application on June 17, 2020. Do I have to pay the loan … This also means that if you use your PPP loan funds to pay yourself and for other approved expenses and apply for loan forgiveness with the appropriate documentation, For full details on how you should spend your PPP loan, go, Salary, wages, commissions, or tips (this is capped at $100,000 based on annual pay for each employee), Employee benefits, including paid time off for vacation, family, medical, or sick leave, Payments for healthcare benefits for employees, State and local taxes on employee compensation. Cost of goods sold means the expenses incurred in the process of providing your product or service as a freelancer, gig worker, or independent contractor. While S/C-corporations, tribal businesses, and businesses with up to 500 employees were able to apply for loans on April 3rd, now sole proprietors, independent contractors, and self-employed individuals can apply. Use your credit card to pay any business, even where cards are not accepted. The Four Ways They Find Problems Worth Solving, Trump Signs Stimulus Bill; ‘PPP Second Draw’ Provides A Shot In The Arm For Small Business Owners, Trump Finally Signs The Relief Act—10 Important Things You Need To Know, The Best Laptops Of 2020…And Other Small Business Tech News, The 7 Worst Customer Service No No’s When A Customer’s Upset, www.sba.gov/disaster-assistance/coronavirus-covid-19, Financial Help for Freelancers and Independent Contractors Affected by the Coronavirus Crisis, Where’s the Money? An employee is any member of your company that receives compensation through your payroll, with the exception of independent contractors. This includes employees obtained from a temporary employee agency, professional employee organization or leasing concern. The SBA announced it's again opening up its EIDL grant and loan program to help those affected by ... [+] the coronavirus pandemic. All of the following count towards your approved payroll expenses: Independent contractors do not count as employees under the Paycheck Protection Program. On the sample check below, the account number is 2020202086. Click here to check out our small business loans resources. 121.201 for the Applicant’s industry. See your revenue performance and know where you stand against competitors. PPP Loan Calculation for Independent Contractors. Make sure to check the box that says you want to apply for the $10,000 grant (although it will only be $1,000 for independent contractors, freelancers, and gig workers). So check your bank account regularly. This article was originally published on AllBusiness. The amount of loan forgiveness shall be reduced proportionately by (i) the number of employees during the covered period as compared to either the prior year or January and February 2020; and (ii) any reductions in salary in excess of 25% of an employee’s total salary or wages as compared to the last quarter that the employee was employed. Where it asks for “Owner” put your name and “100” percent owner. Initially, $10 billion was allocated by the government for these grants, but due to the overwhelming amount of applications, the SBA suspended accepting new applications in mid-April 2020 due to a lapse in appropriations for the grants. The grants are available until December 16, 2020, but the SBA will quickly run out of money, so you should apply as soon as possible. Go to the SBA application site for application. Independent contractors will now be eligible for SBA loans. (2) VERIFICATION.—Before disbursing amounts under this subsection, the Administrator shall verify that the applicant is an eligible entity by accepting a self-certification from the applicant under penalty of perjury pursuant to section 1746 of … If you haven’t applied for your PPP emergency stimulus loan yet, there’s still time, but you have to act fast. You can still pay them with your loan, as they qualify as a legitimate expense, but that portion you spend will not qualify for loan forgiveness if it is used to pay independent contractors. His focus is on Internet, digital media, and software companies, and he was the founder of several Internet companies. Customer relationships thrive when local businesses and consumers are connected through Womply data and technology. This means that if you take a salary (pay yourself) as a business expense, that counts as legitimate “payroll costs” and you can apply for a PPP loan to cover that and other legitimate expenses for the 8 week period following receipt of your PPP funding. Now, there's another provision of the EIDL program, called the advance, under which small-business owners can collect a $1,000 grant per employee for up to 10 employees… The application process involves filling out a simple SBA form requesting an Economic Injury Disaster Recovery Loan, which provides for the advance even if the loan is not granted. The application should be found at covid19relief.sba.gov/#/. Talk to your lender and get your application submitted ASAP. This program is for any small business with fewer than 500 employees (including sole proprietorships, independent contractors and self-employed persons), private non-profit organization or 501(c)(19) veterans organizations affected by COVID-19. ☐ The Borrower is a self-employed individual, independent contractor, or sole proprietor who had no employees at the time of the PPP loan application and did not include any employee salaries in the computation of average monthly payroll in See why Womply is the #1 marketing and CRM solution used by 500,000+ businesses. All Rights Reserved. The Applicant (1) is an independent contractor, eligible self-employed individual, or sole proprietor or (2) employs no more than the greater of 500 or employees or, if applicable, the size standard in number of employees established by the SBA in 13 C.F.R.