We've been actively researching options for self-employed businesses, like yourselves, in hopes of coming up with helpful resources and programs that could assist you financially during this challenging time.
If you have questions about these programs, please contact them directly.
The new emergency stimulus bill passed into effect last week states it will cover self-employed and freelancers in a special unemployment plan.
Under the plan, eligible workers will get an extra $600 per week on top of their state benefit. But some states are more generous than others. According to the Century Foundation, the maximum weekly benefit in Alabama is $275, but it’s $450 in California and $713 in New Jersey.
We recommend you contact your state's unemployment office to learn more and to see if you qualify.
Payroll Protection Plan
PPP applicants must certify, in good faith, that the uncertainty of current economic conditions makes the loan necessary to support your business operations. If your business has been adversely affected by the pandemic, or you are legitimately concerned that some of your customers will not be able to timely pay their bills, then you probably need these funds and shouldn’t be afraid to claim them. Applicants must acknowledge that the funds will be used to maintain their salary, maintain payroll (if you have any) or make mortgage payments, lease payments and utility payments. Applicants also must certify that they do not have other “covered loan” applications pending for similar or duplicative purposes.
Applicants will need the following documentation: payroll tax filings reported to the IRS, any Forms 1099–MISC you received for 2019, and income and expenses from your sole proprietorship. Copies of your 2019 and/or 2018 tax return are probably sufficient to satisfy the documentation requirements, especially if you prepare Schedules C and SE. You might want to complete your 2019 Form 1040 if your 2019 income is higher, or your expenses lower, than those amounts were in 2018.
Applicants can get a PPP loan of 2.5 times their monthly average “payroll costs,” which has a special definition for this purpose and includes profits from your business up to $100,000/per year, capped at $10 million.
The following example is for a self-employed person with no employees. Assume that you have a self-employment income of at least $100,000 in the year before you received the loan ($8,333 as the monthly amount). This means you can get a PPP loan of $20,833 ($8,333 * 2.5) even if you have no business expenses.
Further, you can get the whole loan forgiven if you have $20,833 of expenses from any of the following four categories:
Payroll Costs: This can be up to $15,300 that you pay yourself plus amounts paid to others who might perform services in connection with your business.
Rent: This can be for the office space or property you rent for your business (like a leased car).
Utilities: This can include internet access.
Mortgage Interest: This may include some mortgage interest on your home mortgage if you maintain a home office.
We anticipate that people will not have difficulty getting to $20,833 of qualified expenses in eight weeks since most will be using the proceeds to effectively pay themselves about 75 percent of the loan proceeds. A spreadsheet for the PPP loan computation and forgiveness is available here, but remember that payroll includes your profits (up to $100,000 per year). Most people will want to borrow the maximum amount they can justify under the 2.5 times calculation because there is no personal guarantee and no collateral needed. Any amount not forgiven must be repaid over 10 years at 4 percent interest.
You also may be able to request an EIDL (in addition to a PPP loan) so long as the loan proceeds are not used to cover the same expenses. You apply for your EIDL online here, directly with the SBA. They are approved solely based on your credit score. EIDLs are available up to $2 million, though most borrowers will prefer to cap their application at $200,000 or less to avoid the need for a personal guarantee. EIDLs are likely to be granted more quickly than a PPP loan. The first $10,000 of an EDIL is converted to an immediate grant, even if your loan request is denied [$10,000 free loan]. So, using the example, you could request a $36,000 EIDL loan when you file for your PPP loan. By the time the PPP loan is granted a month later, the first $10,000 of your EIDL loan will become a grant, and you will have already applied another $10,000 or so toward maintaining your business (and your own income). So you would only need to repay about $16,000. Any unpaid balance carries interest at 3.75 percent.
In the face of the unknown, artists have, unsurprisingly, gotten creative about how they are changing their artistic practice. However, if you, like many, are finding that you need additional financial resources to get you through this time, there are emergency grants available for artists.
We, like many other arts organizations right now, have compiled a list of emergency resources for artists as well an ongoing list of crowdfunding efforts to provide financial relief for artists.
If you have a resource that we haven’t mentioned, please send us an email and we will add it to the list. This is an evolving list that we will be over the next few weeks.