CARES ACT Forgivable Payroll Protection Loan For INDEPENDENT CONTRACTORS Explained

If you are an Independent Contractor and have lost wages due to the COVID-19 Virus Pandemic, as part of The Care Act you are entitled to a forgivable Payroll Protection Loan through the Small Business Administration.

What is the Paycheck Protection Program?

The Paycheck Protection Program is part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act. This is a nearly $350-billion program intended to provide American small businesses with eight weeks of cash-flow assistance through 100 percent federally guaranteed loans. You can read the bill in its entirety here.

Program highlights

  • All small businesses are eligible
  • The loan has a maturity rate of 2 years and an interest rate of 1%
  • No need to make loan payments for the first six months
  • No collateral or personal guarantees required
  • No fees
  • The loan covers expenses dating back to February 15, to June 30 2020
  • The loan can be forgiven and essentially turn into a non-taxable grant

Do I qualify for the program?

Most Likely, This program is more extensive than the SBA disaster loan. Small businesses, sole proprietorships, independent contractors, and self-employed individuals can all qualify.

  • Sole proprietorship’s will need to submit schedules from their tax return filed (or to be filed) showing income and expenses from the sole proprietorship.
  • Independent contractors will need to submit Form 1099-MISC.
  • Self-employed individuals will need to submit payroll tax filings reported to the Internal Revenue Service.

Independent Contractors and those who are self employed may begin submitting applications April 10, 2020.

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