Q: In last week's column ("What the Cares Act has for travel agencies"), you covered the parts of the Cares Act that could provide aid to travel agencies. What about independent contractors (ICs)? Can they get relief of any kind?
A: The Coronavirus Aid, Relief and Economic Security Act has three programs that can be of assistance to ICs:
1. Pandemic Unemployment Assistance Program: This program provides payments until Dec. 31 to those not traditionally eligible for unemployment benefits, namely independent contractors who are sole proprietors. Benefits will be based on ICs' 1099s.
You don't have to be out of business to apply. You can apply if you are "partially unemployed" because of Covid-19.
In addition to regular state benefits, this program provides for a payment of $600 per week to each recipient until July 31. Finally, if you reach the maximum number of weeks permitted by your state, the federal government will pay for an additional 13 weeks of benefits.
The Cares Act allows states to waive the usual one-week waiting period between when you apply for unemployment compensation and when you begin receiving it. To apply online, Google "apply for unemployment compensation in (your state)."
When you apply, be sure to state that you are an independent contractor or that you are self-employed. Do not state that you are an employee of your host agency or you might be denied and trigger an audit of the host agency.
2. Small Business Administration's Economic Injury Disaster Loan Program: Self-employed ICs are eligible to apply for an Economic Injury Disaster Loan (EIDL), which includes an advance of up to $10,000 available within three days of a successful application, and the loan advance will not have to be repaid.
The loan itself can be up to $2 million, and no personal guaranty is required on loans of up to $200,000. The requirements are very streamlined. Apply here.
3. Payroll Protection Program: As of April 10, ICs are be eligible to apply under the new Payroll Protection Program (PPP) for a loan determined by 2.5 times monthly average pay plus an additional 25% of that amount. Loan payments will be deferred for six months and can be forgiven if used to cover the first eight weeks of pay and certain other expenses.
You apply for a PPP loan through any of the 1,800 existing banks or credit unions that make SBA-guaranteed loans. If you already have a relationship with a bank, go to that bank first.
The application form, instruction and explanations are here.
If you have your own corporation or limited liability company, you probably should apply for an EIDL or a PPP loan in your company's name if you file taxes as an employee of the company.