SBA Paycheck Protection Program (PPP): The Paycheck Protection Program is a loan designed to provide a direct incentive for small businesses to keep their workers on the payroll. SBA will forgive loans if all employees are kept on the payroll for eight weeks and the money is used for payroll, rent, mortgage interest, or utilities. Lenders may begin processing loan applications as soon as April 3, 2020. The Paycheck Protection Program will be available through June 30, 2020.
This “forgivable” loan/grant program would primarily benefit DZs and other small business that pay all their workers as employees rather than 1099 contractors, since the loan amount is equal to 2½ times the average monthly payroll costs, and payments to independent contractors do not qualify as payroll costs (No employees = 2½ x $0 = $0). And although the money can also be used for mortgage/rent and utilities, 75% of the forgiven amount must be used for payroll. Self-employed individuals and independent contractors can apply for the PPP using their net self-employment income, but again, if they don’t have employees themselves, forgivable payroll costs would be $0. Application can be made through banks and credit unions who are SBA approved lenders.
SBA $10,000 Economic Injury Disaster Loan Emergency Advance: In response to the Coronavirus (COVID-19) pandemic, small business owners in all U.S. states, Washington D.C., and territories are eligible to apply for an Economic Injury Disaster Loan advance of up to $10,000. This advance will provide economic relief to businesses that are currently experiencing a temporary loss of revenue. Funds will be made available following a successful application. This loan advance will not have to be repaid.
This is the most promising program, since it is not tied to payroll costs, and is available to independent contractors as well as other small business entities. If it is used for business operating expenses, the $10,000 does not have to be repaid. Applications can be filled out and submitted online at the SBA website.
Overview and Eligibility
SBA Economic Injury Disaster Loans: In addition to the $10,000 Loan Advance, small businesses can apply for loans of up to $2,000,000 for economic injury sustained as a result of the coronavirus emerRescy. Applications can be filled out and submitted online at the SBA website.