We’re sharing our up to date information and a few free resources you don’t want to miss out on to help you navigate your finances and get your questions answered during all of this. Whether you’re a freelancer and have questions about the PPP loan or you’re a recent college grad and are wondering what you should do with your student loans, we’re here to help.
1. Relief options for freelancers, independent contractors, and small business owners.
As many of you have probably heard by now, freelancers, independent contractors and small business owners can currently apply for different relief options. The most common of these programs being the Payroll Protection Program (PPP) loan and the Economic Injury Disaster Loan (EIDL), which allow borrowers to apply if they’ve lost income because of COVID-19 or have had to stay home to care for children due to school closures. The PPP loan is forgiven for amounts used for payroll and some other expenses and/or the EIDL program with the Small Business Administration.
First, we suggest figuring out how much relief you think you’ll need. If it’s under $10k – go for the EIDL. This money comes straight from the Small Business Administration and doesn’t involve a bank. However, if you think you’ll need more than $10k, or EIDL funding runs out, then going for the PPP makes sense.
PPP applications are through your bank. For example, if you use Chase, you should see application information when you log in. Here is a list of Banks And Fintech Companies Accepting Paycheck Protection Program Loan Applications From New And Non-Bank Customers.
Payroll, rent, mortgage interest, and utilities are forgiven for both. If you have $20k in payroll and get $10k in EIDL forgiven and your get $20k in PPP, $10k is forgivable but if you get $10k of each, both are forgivable.
What are the details of the PPP loan?
You’re able to request a loan of 2.5 times your net profit. Self employed individuals (including independent contractors) who file IRS Form 1040 Schedule C with no employees should enter their net profit from their 2019 Schedule C line 31 as payroll. Here’s a calculator that might help.
Furthermore, you’ll have to submit a copy of your 1040 Sched C (the tax form that you file for self employed income) in order to apply. If you haven’t filed your taxes yet, that’s okay but you’ll need to have that form filled out in order to apply.
The loan will be fully forgiven if all employees are kept on the payroll for eight weeks and the money is used for payroll, rent, mortgage interest, or utilities (due to likely high subscription, at least 75% of the forgiven amount must have been used for payroll). Of that 100%, they will only forgive 25% of the money that is used on rent, mortgage interest, and utilities. So if you use 70% for payroll, and 30% for those other expenses they will only forgive 95% of that loan.
Also, the demand has been so high that it’s expected that you can only get a loan for payroll and it’s unclear exactly what counts towards “payroll”, though it is probably Sched C income, partnerships, and may include S corporation profits.
Even if you have no way of being able to pay it back, still apply. You probably won’t have to pay it back. Any expenses outside these will have to be paid back. The interest is 1%, you don’t have to pay for six months, and you have two years to pay it back.
All the info you need is right here.
Who can apply?
- Freelancers, independent contractors and small business owners can now apply if they’ve lost income because of COVID-19. Here is a more detailed list:
- Any small business concern that meets SBA’s size standards
- Any business, 501(c)(3) non-profit organization, 501(c)(19) veterans organization, or Tribal business concern (sec. 31(b)(2)(C) of the Small Business Act) with the greater of:
- 500 employees, or
- That meets the SBA industry size standard if more than 500
- Any business with a NAICS Code that begins with 72 (Accommodations and Food Services) that has more than one physical location and employs less than 500 per location
- Sole proprietors, independent contractors, and self-employed persons
When should you apply?
PPP resumed April 27, 2020 and we encourage freelancers to apply as soon as they can (see a full list of current SBA-approved lenders below), as the money will almost certainly run out again.
Other things to note?
Note that all of this is in flux because nobody really knows how big our problem is or how long it will last. They may extend forgiveness, the deference of payments, and length of time to repay. But these are the rules right now. Also, they expect processing to take about two months, so do keep that in mind.
There are other relief, as well as unemployment options. Do note that freelancers, independent contractors and small business owners can now apply for unemployment even if they don’t have a W-2. Learn more here: sba.gov/funding-programs/loans/coronavirus-relief-options and here: nytimes.com/article/coronavirus-money-unemployment.html
Lastly, a great resource during this time is the Freelancers Union.
2. Updates on student loans.
Learn more on how to pause your federal student loans here.
3. Go to resources that we’ve been checking regularly (and you should, too!).
4. A FREE call with our team.
Bring your questions and concerns – let’s chat. Schedule your complimentary call here.
5. SBFP FREE 5 Day Challenge:
Many of you have reached out with questions and concerns about navigating your finances during these unprecedented times. So if you’re feeling unsure what you should be doing with your money right now (saving? Investing? Decreasing expenses?), or if you’re feeling a little stuck, a little worried, or simply have extra unexpected time at home, we have a special invite just for you!
Join us for our FREE Stay Home and Take Control Five Day Challenge this week!
This challenge is fun, easy and consists of small actions you can do each day to help you feel more in control. Remember: money doesn’t control you – you’re in the driver seat.
7. A special invitation to join our private community Your Amazing Financial Life for FREE.
With everything going on in the world, we’re inviting you to a safe, private community to ask your financial questions during this ever-changing time. The goal of our community hasn’t changed, we strive to help you live your AMAZING life, whatever that means to YOU.
This is the time for young adults to shore up their financial situation whether it’s if they are starting to invest and wonder if it’s still safe to be in the stock market or if they should be investing their money or saving it. We cover all the basics of setting up a great financial foundation, introduce investment concepts, answer questions about debt (student loan and getting started with credit cards) on YAFL. We’ve been having lively conversations on a wide variety of conversations.
We’re inviting you to join us for a six months free to get through all of this – together. (And if you’re a college student, we’re inviting you to join for free through your college career!) Come join us!
We have a lot of exciting things going on over in this group, including
💸 Unlimited access to the SBFP team’s advice, guidance, and support
💸 Monthly topics with conversations, learning, and planning
💸 Monthly Q&A video calls with the team
💸 Monthly wine and cheese events
💸 Special access to courses, challenges, events, book clubs and meet ups!
💸 Personalized ADVICE from us and STORIES from others that can’t be found anywhere else
💸 And so much more!
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