Coronavirus Recovery Programs for Small Business and Self-Employed
In addition to a dizzying array of changes to tax collection dates, and retirement plan provisions there are federal loans and advances that are important for small business owners. The self-employed and independent contractors are eligible for both of these programs.
There is a loan available for any small business with less than 500 employees. It is called the “Economic Injury Disaster Loan” or EIDL. The interest rate is 3.75% ( 2.75% for non profits). EIDL is administered by the Small Business Administration. This loan will have to be paid back. There is a feature called an “advance” that is automatically included when you apply for EIDL. The advance is $1,000 per employee up to $10,000. This advance does not need to be repaid and the business owner counts as one of the employees. So if you are a sole proprietor or a single member LLC you would qualify for $1,000. You apply for this loan directly through
There is another loan available that is designed to help employers keep their employees on the payroll. This loan is called the “Payroll Protection Program or PPP. The PPP has a low interest rate 1% and it can be forgiven altogether if certain conditions are met. Basically, the requirements for loan forgiveness are that you keep your employees on the payroll for 8 weeks and that you use the funds for payroll costs, interest on mortgages, rent and utilities. Firms or individuals applying will need their 2019 schedule C or other proof of payroll and expenses. In general you may be eligible for 2.5 times your monthly payroll. You can find a detailed Q&A about the PPP here.
As of April 17, 2020, funding for both of these programs has been tapped out and they are awaiting replenishment. See the links cited above for the latest information or to apply and get in the queue.
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