Paycheck Protection Program
The Paycheck Protection Program (PPP) provides for Independent Contractors who are eligible low- interest –SBA loans. The small businesses that are impacted by the COVID-19 pandemic that can use to cover payroll costs for their workforce. It has been recently passed by Coronavirus Aid, Relief, and Economic Security (CARES) Act for other operational costs such as rent, interest on mortgage obligations, and utilities.
The PPP is potentially forgivable given the nature of the situation that has left the Independent Contractors with no business earnings. The traditional employers who operate their business as an independent contractor will significantly benefit from this program. These small businesses with less than 500 employees, the PPP loans may also be available for eligible self-employed individuals.
Eligible independent contractors, who regularly carry on business, can apply for a PPP loan. They can use the proceeds in the same way as other qualifying business entities can. The maximum amount such individuals can borrow under the program will also be determined in the same way as it is for other employers.
Amount available for Independent Contractors
The maximum amount available for Independent Contractors is up to $10,000,000. This is subject to accommodation for seasonal business loan applicants based upon the prior year’s expenses. Qualifying borrowers who were not operating their business in the prior year can obtain a PPP loan.
Documentation required for PPP Loans
Documentation required for Independent Contractors Paycheck Protection Program applicants includes payroll tax filings reported to the IRS. These PPP loans must provide Form 1099–MISC documentation to support their claimed eligibility. The Administrator of the SBA and the Secretary of the Treasury determines the income and expenses from the sole proprietorship.
The allowable use for PPP loan proceeds for independent contractors is the same, specifically for other business entities. Qualifying borrowers such as Self-employed individuals and a sole proprietorship can use the loan proceeds available under the program.
These include:
- Rent
- Utilities
- Payrolls Cost
- Lease Agreement
- Payment of interest on any mortgage obligation
- Interest on any other debt obligations incurred before the covered period
- Personal work, sickness, medical leave, and insurance premiums
- The costs that are related to the continuation of group health care benefits, employee salaries, commissions, or similar compensations
PPP loans used for independent contractors between February 15, 2020, and June 30, 2020, maybe eligible for forgiveness and may not need to be repaid. All the self-employed individuals can immediately apply for these PPP loans to meet their simple requirements.
This is an unprecedented, unnerving, and uncertain time for independent contractors, PPP remains steadfastly committed to helping weather the storm. They have also created COVID–19 Resource Center to provide additional information and insights. For other questions regarding obtaining loans through the Paycheck Protection Program talk to the lender.
