Do I qualify for The Paycheck Protection Program?

IF YOU ARE YOUR OWN BOSS... JUST MAYBE.


Is there help for Independents? Yes.... under certain conditions.


Are you still suffering from financial hardships due to COVID? Many of us have had our lives turned upside down due to the pandemic. If you are a parent of a young child, you may find yourself unable to work due to closed schools or lack of access to childcare. The same may be true if you are a caretaker of an aging parent or disabled family member. Even one year into the pandemic, you may not be able to work the same hours as you did and find yourself struggling financially. So, is there help for the independent? The answer is "yes", if you meet certain conditions.


By now most of us know about the CARES Act and financial aid it was intended to provide for hardships resulting from COVID19. Employers used the PPP loans to cover costs of salaries for employees while businesses were shut down. The goal of this program was to sustain employment and the loan did not have to be reimbursed if businesses could show that they had the same number of employees as they did in pre-pandemic times. If you are self employed (also known as a gig worker/1099), you can qualify for the PPP loan if you meet the following critieria.

  1. You were self-employed prior to February 15, 2020.

  2. You had income from self employment.

  3. Your principal place of residence is in the United States.

  4. You must have filed a Form 1040, Schedule C, for 2019.

Note that if you are in a Partnership, the Partnership must apply, not the individuals.


What You Can Use the Money For

  • Owner compensation replacement.

  • Employee payroll costs (if have employees).

  • Mortgage interest payments, or business rental payments, business utility payments, and auto expenses. FYI, no pre-payments or principal payments for any business mortgage obligation are allowed and auto expenses only if previously eligible for auto expense deduction.

  • Interest payments on debt incurred before February 15, 2020.

  • Refinance previous EIDL loan.


How to Calculate How Much You Can Borrow

If you had no employees working for you, go dust off your 2019 Tax Forms and find Form 1040, Schedule C, and look at Line 31. This gives you your net profit for 2019. If this amount is greater than $100,000.00 well then, congratulations, but you are not eligible. You are also not eligible if this amount is zero or less. Anything in between and you can qualify.


The formula to calculate how much you can borrow is:


Net Profit (Line 31) / 12 x 2.5 = $ Qualifying Loan Amount $

Plus

If you borrowed money from January 1 - April 3, 2020, from the Economic Injury Disaster Loan (EIDL), and you want to refinance that, you can add this amount in as well.


I Need This... How Do I Get It?


You can go to SBA to get matched with a lender. When you apply, you will need the following:

  1. 2019 Form 1099-Misc with earnings in Box 7 for non-employee compensation.

  2. 2019 Form 1040, Schedule C

  3. Proof of being in operation on or around February 15, 2020, such as invoice copy or bank statement.

You can find a lender at the SBA with this link.


And, if you want to read the fine print, you can see the Interim Final Rule here.


Now... you're in the know.

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