The two most recent Legal Briefs columns covered the Cares Act programs available to travel agencies and independent contractors (ICs). Here are several follow-up questions:
Q: Can I apply for an Economic Injury Disaster Loan (EIDL) through the Small Business Administration (SBA) and a Paycheck Protection Program (PPP) loan through my bank at the same time?
A: Yes, and I would encourage you to do so. The PPP approval process will probably take longer than the EIDL process because most banks are not equipped to handle the avalanche of PPP applications already received, whereas the SBA seems to be making somewhat quicker decisions.
Although I had written that an EIDL loan comes with a $10,000 grant, I have learned that the SBA is limiting the grants to $1,000 per employee up to $10,000, so you will get the $10,000 only if you have 10 or more employees.
If you get the EIDL loan proceeds, don't use the funds to cover payroll costs and benefits, rent and utilities during the first eight weeks after you get the PPP loan. Otherwise, your PPP loan won't be eligible to be forgiven, because you are supposed to use the PPP loan proceeds for those obligations.
Q: As an IC, can I apply for Pandemic Unemployment Compensation as well as an EIDL and a PPP loan?
A: You can apply for all of it, but you can't legally collect unemployment compensation while you are paying yourself from the loan proceeds. However, if your loan applications are delayed, nothing stops you from applying for unemployment in the meantime.
Unfortunately, many ICs have had trouble successfully applying for unemployment compensation, as states had only a week or so to prepare their websites, and state agencies had no experience with IC applications.
In your unemployment application, do not list your host as your employer. List yourself, or if you have your own limited liability company or corporation, list that entity as your employer if you have an unemployment account with the state.
If you mistakenly list your host as your employer, it will properly deny that you are an employee, and your application will be denied or set aside, resulting in possibly long delays. It is probably best not to name your host at all, unless you need to provide your 1099.
Q: Am I eligible for unemployment if I still receive some commission splits from past sales, or should I tell my host to hold all my commissions for several months?
A: You can still file for unemployment if your income has merely gone down because of coronavirus but not eliminated entirely. In any case, conspiring with your host to delay compensation in order to qualify for unemployment may not be legal.
Q: As an IC, I made $105,000 last year. How much of a PPP loan can I get?
A: Deduct the amount over $100,000, which would be $5,000. Take the monthly average of $100,000 per year (i.e., $8,333) and multiply it by 2.5, yielding $20,833, plus the amount of any EIDL loan you have already gotten.