As the COVID-19 pandemic continues to disrupt economies around the world, governments and businesses are taking measures to mitigate its impact. One such measure in the United States is the Paycheck Protection Program (PPP), a loan program aimed at helping small businesses continue to pay their employees despite the economic disruption caused by the pandemic. One question that has come up in regards to the PPP is whether independent contractors are eligible to apply for the loan. Here’s what you need to know.
First, it’s important to understand what the PPP is and how it works. The PPP is a loan program administered by the Small Business Administration (SBA) and designed to help businesses keep their employees on payroll during the pandemic. The loans are forgivable if the funds are used for eligible expenses, such as payroll, rent, and utilities, and if certain conditions are met. The loans are available to businesses with fewer than 500 employees, including sole proprietors, independent contractors, and self-employed individuals.
So, can independent contractors apply for a PPP loan? The answer is yes. Independent contractors, sole proprietors, and self-employed individuals are all eligible to apply for a PPP loan, as long as they meet certain criteria. Here’s what you need to know:
– You must have been in operation on February 15, 2020. This means that you must have been in business or self-employed on or before this date to be eligible.
– You must have been affected by the pandemic. To be eligible for a PPP loan, you must be able to demonstrate that your business has been negatively impacted by the COVID-19 pandemic. This could include, for example, a decrease in revenue or the inability to operate due to government-mandated closures.
– You must have filed a Schedule C with your 2019 tax return. If you’re a sole proprietor or independent contractor, you will need to provide proof of income using a Schedule C from your most recent tax return. If you have not yet filed your 2019 taxes, you can use your 2018 tax return instead.
If you meet these criteria, you are eligible to apply for a PPP loan. You can apply through any SBA-approved lender, such as a bank, credit union, or online lender. The amount of the loan you can receive is based on your average monthly payroll costs, up to a maximum amount of $10 million. The funds can be used to cover eligible expenses for up to 24 weeks after the loan is disbursed.
In summary, independent contractors are eligible to apply for a PPP loan if they were in operation on February 15, 2020, have been negatively impacted by the pandemic, and can provide proof of income using a Schedule C from their most recent tax return. If you’re an independent contractor and you’re struggling to make ends meet during the pandemic, the PPP may be a valuable resource to help you keep your business afloat.
