< The CARES Act: What Independents Need to Know

The CARES Act Benefits: FAQs

MBO has collected and compiled a number of the most frequently asked questions about the CARES Act and how it impacts independent workers, as well as traditional employees. If you need specific information about your unique situation and cannot find your answer below or elsewhere on this site, please consult with a tax professional.

This situation is evolving rapidly and we will continue to update this page as new information is revealed. Keep checking in for the latest information, as new guidance and details come out frequently.

General Questions

CARES Act Benefits

Wade Forbes, an MBO Advantage member, provided us with this useful sketch note of our recent webinar.

For more information on the benefits that are available, see the below FAQs and review MBO’s CARES Act benefits page. 

Individuals (everyone can take advantage of, regardless of business or tax structure) 

  • Expanded unemployment assistance - independent workers eligible for the first time
  • Direct cash to your bank account 
  • Retirement account withdrawals 
  • 2019 tax deadline extended to July 15 
    • Q1 estimated tax deadline also extended to July 15 (for those filing quarterly estimated taxes) 
    • Q2 estimated tax deadline is still June 15 for now 

Independent businesses (S-Corp, C-Corp, Sole-P, LLC, pass-through entity, independent contractor, etc.) 

  • Deferring employer side of Social Security tax
  • Refunds for Net Operations Loss (NOLs) 
  • Cash grant for immediate assistance (EIDL), and an additional loan component
  • Payroll loans with potential forgiveness (PPP Loan)

 

New details are constantly emerging about the CARES Act benefits offered to independents and small businesses. MBO will provide further details on specific documentation as those details become available.

For most benefits, documentation requirements appear limited. The goal of the CARES Act is to get money to people quickly and reduce bureaucratic red tape as much as possible. Many of the benefits require you to know your net income and then to verify you meet the requirements.

Items you may need:

  • 2019 tax forms (1099-MISC)
  • 2020 invoice, bank statement, payment reports, or book of record to establish your self-employment status
  • Monthly payroll reports

For example, review the application form for the PPP loan. You must list your average monthly payroll (your net income as an independent) and certify in good faith that you meet the necessary requirements. Your lender would likely request payroll documentation as well.

For a sole proprietor or independent contractor: payroll costs include wages, commissions, income, or net earnings from self-employment, capped at $100,000 on an annualized basis for each employee.

If you’ve filed your taxes as a sole proprietor in the past, it is whatever you’ve reported as income on your Schedule C. Note that it is not your gross amount, but your income.

There are some eligibility rules around when your business was started, for certain benefits listed below. The government wants to ensure that people who were already in business and directly affected by the pandemic get the help they need.

For example, you have to show you were in business on February 15, 2020 to be eligible for the loans, by providing the lender with payroll documentation.

You may be able to show January payroll information, but those details are still unclear.

Individuals affected would still be able to take advantage of the benefits available to everyone (like unemployment, retirement withdrawals, direct cash), just not those meant for businesses specifically.

MBO does not believe businesses that closed in 2019 would be eligible for benefits like the EIDL grant and PPP loan. These benefits are designed to help people who have lost their work or underwent damages directly related to the COVID-19 pandemic. If a business closed or went inactive in June 2019, for example, this could not be due to the current situation.

Individuals affected would still be able to take advantage of the benefits available to everyone (like unemployment, retirement withdrawals, direct cash), just not those meant for businesses specifically.

MBO Partners has a number of available resources for you:

We'd love to tell you more about our services and offerings. Please visit our website to learn more about the MBO Platform. You're welcome to reach out directly as well to determine if there is a specific service that is a good fit for your unique needs.

How to Obtain Benefits

Here is a summary of how benefits can be accessed who may be eligible. Refer directly to the relevant benefit section on the FAQs page for more information on each benefit, as well as further details on eligibility and application instructions.

FOR ALL INDIVIDUALS

DIRECT PAYROLL RELIEF FOR INDIVIDUALS

Payments will be delivered automatically via direct deposit or mailed check; no action is required.

UNEMPLOYMENT

Unemployment is filed with the state and you can find your state agency’s unemployment site via this finder. Each state manages this process differently and pays out different levels of benefits as well.

ACCESS TO RETIREMENT FUNDS

Contact your retirement plan provider after carefully evaluating if this financial option works best for your needs.

EXTENDED PERSONAL & CORPORATE TAX FILING DEADLINE

No specific action is required, but we'd suggest checking with your accountant or tax preparation expert to understand if you should recalculate quarterly tax payments based on projected income changes. 

 

FOR SMALL BUSINESSES AND INDEPENDENT PROFESSIONALS

Benefits applicable for many S-Corps, C-Corps, sole proprietors, LLCs, partnerships, independent contractors, and self-employed individuals.

DEFERRED PAYROLL TAX

No need to apply – you can simply defer payment of the employer portion of FICA (for corporations), or 50% of self-employment tax (for self-employed sole proprietors).

TAX REFUNDS FOR BUSINESS LOSSES

Contact your Accountant or Tax Preparer to calculate your probable business loss for 2020 and file amended returns to obtain refunds from previous years.

ECONOMIC DISASTER GRANTS (EIDL LOANS)

You can file directly with the SBA.

Eligibility is based on your credit score (currently unknown what the required score is).

PAYCHECK PROTECTION PROGRAM (PPL LOANS)

Here is the PPP application form. Learn more, including instructions on how to apply, on the SBA website. You can also contact your bank directly. Borrowers must sign a certification of necessity to obtain.

MBO's resources are focused at the federal and national level. 

Several benefits, such as unemployment, are distributed via the states. We encourage you to visit your state and local resources to access those benefits; additional local resources may also be available on a case-by-case basis for small businesses. 

This article in Forbes is also one we've found to be a good resource for ongoing state-by-state Information. 

Direct Payroll Relief for Individuals

All individuals, including independent contractors, with an adjusted gross income of $75,000 or less ($112,500 for head of household filers, and $150,000 for married filing jointly) will receive recovery payments of $1,200. These amounts increase by $500 for every child. These payments are based on 2019 tax returns if filed, and if that tax return was not filed, on the AGI listed on your 2018 return.

These benefits phase out for those who don’t need it. The benefit phases out proportionally based on the following levels ($99,000 for individuals, $146,000 for head of household filers, and $198,000 for joint filers).

We've created an easy-to-use calculator to help you determine the amount of stimulus check you'll receive.

All Americans whose income falls within a defined range will receive an automatic payment of up to $1200 per individual and $500 per dependent child.

Use our simple calculator to see if you qualify and estimate how much your payment will be.

HOW TO RECEIVE CHECK

For most people: whatever payments you're eligible to receive will be delivered automatically via direct deposit or mailed check; no action is required.

  • People who do not set up direct deposits with the federal government will be mailed a paper check.
  • People who don't file taxes but do get Social Security payments will get a payment the same way they get their Social Security payments.
  • People who don't file taxes or get Social Security payments will need to send the IRS their information through a "simple web portal" (more details to come).

TIMING

You may have already received your check if you provided your bank account when filing taxes. If you did not, you’ll likely receive a paper check and the timing of that is currently unknown.

Your best bet is to go to the IRS Get My Payment site, where you can get timing info directly from the IRS. Note you’ll need some of your tax/personal info handy. Also, visit the IRS FAQs about the direct payments.

The money can be used for whatever you deem necessary to get you and your family through this period of uncertainty.

 

Unemployment

Yes! If you have been negatively affected by the pandemic in regards to loss of work or reduced hours, you can apply for unemployment even if you are not traditionally employed.

The CARES Act extends unemployment benefits—for the first time—to self-employed workers, small business owners, independent professionals, and gig economy workers (in addition to standard employees who have always had access to unemployment).

The specifics of unemployment vary from state to state, so it’s difficult for us to comment directly on specific criteria. However, with the CARES Act, independent workers are—for the first time—are eligible for unemployment just like traditional workers have been in the past (and still are).

The waiting period has also been removed, so unemployment can be claimed immediately. Note that unemployment is filed with the state and you can find your state agency’s unemployment site via this finder.

Please note that record-breaking amounts of people are applying for unemployment at this time, so you may need to be patient when contacting your state’s unemployment agency.

Unemployment is filed with your state (where you work) and you can find your state agency’s unemployment site via this finder. Each state manages this process differently and pays out different benefits as well.

Unemployment benefits and processes vary from state to state. Each state is managing this differently and all have their own rules. Find your state’s unemployment office.

Typically, state unemployment is usually about 50% of your weekly wage, with a cap around $400/week. Some states it’s more and some states it’s less. The federal government is also adding $600/week on top of whatever the state is providing. This benefit will continue for 4 months. So, in total, you may be eligible for up to $1,000 per week for four months, then the state benefit (usually up to $400) for the remainder of 2020.

But specifics will depend on your state. Contact the state unemployment agency for more details.

Partial compensation will be available to those who have had their work reduced. They are entitled to receive a pro-rated unemployment benefit. We don’t know how the states are going to figure this out yet; they are working on it. Be patient as the states figure this out as well.

Contact your state unemployment agency for more details.

As you may have seen, record numbers of people are filing for unemployment at the moment. Volume is high and, unfortunately, many of the states are not prepared for the amounts of applications at this time.

Each state is approaching things differently, with different processes in place. Some are better equipped than others, but all are facing a new challenge as the CARES Act just came out and large numbers of people are filing for unemployment at this time. And independents filing for unemployment is new for these states, so they are all working through the specifics of dealing with how these types of workers should receive benefits.

Here is a state unemployment finder, if you need it, to make sure you are contacting the right agency.

Access to Retirement Funds

All individuals with qualified retirement plan, such as a 401(k) or IRA, are eligible for this benefit. This allows you to take up to $100,000 as a withdrawal from your retirement account with no penalty. Usually there is a 10% penalty.

There are other drawbacks to taking out retirement funds early beyond the waived 10% penalty, but it may be an option for you if you need the funds immediately. It is a way to get much-needed funds quickly, though those funds will then not accrue interest to possibly grow for retirement.

Contact your retirement plan provider only after carefully evaluating if this financial option works best for your needs.

Any individuals with a qualified retirement plan or plans, such as a 401(k) or IRA, is eligible to make the early withdrawal.

Contact your retirement plan provider after carefully evaluating if this financial option works best for your needs.

For customers using one of MBO’s Retirement Benefit Plans, follow the instructions below.

If on a retirement plan administered by Fidelity:

  • Contact Fidelity's customer service group at 800-294-4015 or visit Fidelity NetBenefits.

If on a retirement plan administered by E*TRADE:

Reach out to your MBO Partners support contact if you have additional questions.

Extended Deadline for Tax Filing

That's correct - the April 15 deadline no longer applies for filing 2019 income tax.

Annual Taxes: Annual tax deadlines for individuals and pass-through entities like Sole Proprietorships have been bumped back to July 15 from April 15.

Estimated Tax Payments: The Q1 and Q2 2020 quarterly estimated tax deadline (for those required to pay estimated taxes) has also been extended, and is now July 15 as well. 

If you do elect to pay your taxes on time, refunds are being expedited.

All individuals and businesses can take advantage of the extended tax deadline.

No specific action is required, but we'd suggest checking with your accountant or tax preparation expert to understand if you should recalculate quarterly tax payments based on projected income changes (if applicable). 

If you are eligible for a refund, you should file quickly. Paying your taxes on time will result in expedited refunds.

If you expect to owe taxes, it’s likely best to delay filing until it’s closer to the new July 15 deadline. For more details, consult a tax professional.

Deferred Social Security Tax

Employers and self-employed individuals may defer payment of the employer share of the Social Security tax. Corporations may defer the employer side of Social Security tax (6.2%). Sole proprietors and pass-through entities may defer half of self-employment tax.

Repayment is required over two years – half by December 31, 2021 and the other half by December 31, 2022.

Eligible entities/workers include small businesses, and also independent workers who pay themselves within a corporate structure, such as a C- or S-Corporation, as well as pass-through entities, like Sole Proprietors.

Notably, this is not available for anyone who uses the SBA 7(a) loans designated for payroll.

If your business is eligible, you don't need to apply for this. You can simply defer payment of the employer portion of FICA (for corporations), or 50% of self-employment tax (for self-employed sole proprietors).

Repayment is required over two years - half by December 31, 2021 and the other half by December 31, 2022.

Tax Refunds for Business Losses

The CARES Act provides five-year Net Operating Loss (NOL) carrybacks for tax years 2018, 2019, and 2020. Effectively, businesses, including sole proprietors, can use what will likely be a tax “loss” for 2020 and “carryback” that loss to their earlier income taxes to receive previous gains as refunds. So, any losses you’ve paid in those years, you get a refund and you can apply for that refund now.

  • The provision relaxes the limitations on a company's use of losses
  • Net Operating Losses (NOLs) are no longer subject to a taxable income limitation and can now be carried back to reduce income in a prior tax year.
  • The provision provides that an NOL arising in a tax year beginning in 2018, 2019, or 2020 can be carried back five years.

Ultimately, this benefit allows businesses, including pass-through entities and sole proprietors, to utilize losses and amend prior year returns for additional cash flow. 

Please check with your tax professional to see if this can help you and for more details. We cannot provide advice or comment on your unique business situation.

Those eligible include small businesses, and also independent workers who pay themselves within a corporate structure, such as a C- or S-Corporation, as well as pass-through entities, like Sole Proprietors, who filed corporate taxes in previous tax years.

This is a complicated topic. Please check with your tax professional to see if this can help you. Essentially, if your business has had profits or losses in prior years, this may benefit you.

Contact your Accountant or Tax Preparer to calculate your probable business loss for 2020 and file amended returns to obtain refunds from previous years.

Economic Disaster Grants (EIDL Loans)

The CARES Act includes provisions for $350 billion of Federally guaranteed loans that are offered through the Small Business Administration (SBA). While these loans are structured to apply to small businesses that pledge to keep their workers, these loans are also available for sole proprietors, independent contractors, and other self-employed individuals as well.

These expand eligibility for Economic Injury Disaster Loans (EIDL) for any individual operating as a sole proprietor or independent contractor during the covered period (January 31, 2020 to December 31, 2020). It was originally designed for disasters; the pandemic is considered a disaster so now applies here as well.

They are administered directly by the SBA for payroll expenses and other operating expenses, including equipment, office mortgage, or rent. If approved, your business can obtain an emergency grant (up to a maximum of $10,000) to help pay for immediate relief caused by this COVID-19 pandemic.

The SBA has indicated as of early April that "to ensure that the greatest number of applicants can receive assistance during this challenging time,"  the amount of your Advance will be determined by the number of your pre-disaster (i.e., as of January 31, 2020) employees. The Advance will provide $1,000 per employee up to a maximum of $10,000." 

Use our calculator to learn more about what relief might be available for you and your business under the EIDL and PPP programs. 

Eligible workers/entities include small businesses, and also independent workers who pay themselves within a corporate structure, such as a C- or S-Corporation, as well as pass-through entities, like Sole Proprietors. Must have under 500 employees.

If you meet the above criteria, eligibility is then based solely on your credit score when applying.

Use our calculator to learn more about what relief might be available for you and your business under the EIDL and PPP programs. 

 

The grant component is an emergency grant that does not need to be repaid if approved. The maximum grant amount is $10,000, though that amount is not guaranteed to all applicants. The exact components to determine the grant amount are still unknown at this time, but we will keep you updated as further information is released.

The SBA has indicated as of early April that "to ensure that the greatest number of applicants can receive assistance during this challenging time,"  the amount of your Advance will be determined by the number of your pre-disaster (i.e., as of January 31, 2020) employees. The Advance will provide $1,000 per employee up to a maximum of $10,000." 

On top of the grant amount, you can apply for a loan of up to $2 million, as needed. You apply at the SBA, they check your credit score, and you must sign an affidavit that you are revealing the truth about damages/replacing financial loss due to the pandemic.

Use our calculator to learn more about what relief might be available for you and your business under the EIDL and PPP programs. 

 

It seems that you may take the grant (of up to $10,000) and not activate the remainder of the loan, although details on this are not quite available yet. Please consult with your tax professional for individual situations.

The SBA has indicated as of early April that "to ensure that the greatest number of applicants can receive assistance during this challenging time,"  the amount of your Advance will be determined by the number of your pre-disaster (i.e., as of January 31, 2020) employees. The Advance will provide $1,000 per employee up to a maximum of $10,000." 

Use our calculator to learn more about what relief might be available for you and your business under the EIDL and PPP programs. 

 

You can file directly with the SBA.

Eligibility is based solely on your credit score. You must sign an affidavit that you are revealing the truth about damages/replacing financial loss due to the pandemic. The federal government has set a total cap on the amount being distributed for this, so you may want to apply quickly to ensure you can take advantage.

Use our calculator to learn more about what relief might be available for you and your business under the EIDL and PPP programs. 

This is currently unknown, but we will update our website with details if we find out.

Use our calculator to learn more about what relief might be available for you and your business under the EIDL and PPP programs. 

 

This loan covers you for damages incurred by the COVID-19 pandemic. It can be used to cover things like payroll expenses and other operating expenses, including equipment, office mortgage, or rent.

Note that the PPP loan (covered in detail below) may be the better loan option if you are only looking to cover payroll losses, as you cannot use both programs for payroll. 

Use our calculator to learn more about what relief might be available for you and your business under the EIDL and PPP programs. 

 

Paycheck Protection Program (PPL Loans)

The Paycheck Protection Program is designed to provide a direct incentive for small businesses to keep their workers on payroll by providing each small business a loan up to $10 million for payroll and certain other expenses. 

If all employees are kept on payroll for 24 weeks from the time of loan orgination or by December 31, 2020 (whichever comes first), SBA will forgive the portion of the loans used for payroll costs (including benefits), rent, mortgage interest, or utilities. Up to 100 percent of the loan is forgivable.

Essentially, eligible businesses or sole proprietors can take a potentially forgivable 4% interest loan (with 6 years or more to pay back) for up to 24 weeks of qualified payroll and overhead. The loan is designed to help businesses replace payroll or keep employees paid.

Learn more at the SBA website or the U.S Treasury PPP site.

Use our calculator to learn more about what relief might be available for you and your business under the EIDL and PPP programs. 

Businesses – including eligible non-profits, Veterans organizations, Tribal concerns, sole proprietorships, self-employed individuals, and independent contractors described in the Small Business Act – with 500 or fewer employees may apply.

Full details on eligibility can be found on the SBA website.

Use our calculator to learn more about what relief might be available for you and your business under the EIDL and PPP programs. 

Here is the PPP application form. Borrowers must sign a certification of necessity to obtain.

Learn more, including instructions on how to apply, on the SBA website or refer to the US Treasury PPP Fact Sheet. 

When can I apply?

  • As of April 3, 2020, small businesses and sole proprietorships can apply for and
    receive loans to cover their payroll and other certain expenses through existing SBA
    lenders.
  • As of April 10, 2020, independent contractors and self-employed individuals can
    apply for and receive loans to cover their payroll and other certain expenses through
    existing SBA lenders.
  • Other regulated lenders will be available to make these loans as soon as they are
    approved and enrolled in the program.

You can also contact your bank directly. You can apply through any existing SBA 7(a) lender or through any federally insured depository institution, federally insured credit union, and Farm Credit System institution that is participating. Other regulated lenders will be available to make these loans once they are approved and enrolled in the program. You should consult with your local lender as to whether it is participating. All loans will have the same terms regardless of lender or borrower. A list of participating lenders as well as additional information and full terms can be found at www.sba.gov.

Use our calculator to learn more about what relief might be available for you and your business under the EIDL and PPP programs. 

In addition to the application form, your lender will likely have documentation requirements.

MBO Partners expects you'll at least need to provide the lender with your income statement or payroll documents.

Use our calculator to learn more about what relief might be available for you and your business under the EIDL and PPP programs. 

Not all banks and lenders are set up to process these loans yet, since this is a new benefit. And we’re mostly hearing reports that they will only accept applications from those with pre-existing accounts with the bank (but this is determined individually by the bank / lender). If you are having trouble filing an application, you should attempt to find an alternative lender.

The SBA has set up the below page to help find eligible lenders:

Use our calculator to learn more about what relief might be available for you and your business under the EIDL and PPP programs. 

The bank looks at a business' average payroll cost per year from last year (2019). Payroll cost includes things like regular payroll, but also benefits, payroll taxes, and overhead.

Sample Calculations:

The following methodology, which is one of the methodologies contained in the Act, will be most useful for many applicants.

    1. Aggregate payroll costs (defined in detail below in f.) from the last twelve months for employees whose principal place of residence is the United States.
    2. Subtract any compensation paid to an employee in excess of an annual salary of $100,000 and/or any amounts paid to an independent contractor or sole proprietor in excess of $100,000 per year.
    3. Calculate average monthly payroll costs (divide the amount from Step 2 by 12).
    4. Multiply the average monthly payroll costs from Step 3 by 2.5.
    5. Add the outstanding amount of an Economic Injury Disaster Loan (EIDL) made between January 31, 2020 and April 3, 2020, less the amount of any “advance” under an EIDL COVID-19 loan (because it does not have to be repaid).

The examples below illustrate this methodology.

  • Example 1 – No employees make more than $100,000 Annual payroll: $120,000
    Average monthly payroll: $10,000 Multiply by 2.5 = $25,000 Maximum loan amount is $25,000
  • Example 2 – Some employees make more than $100,000 Annual payroll: $1,500,000
    Subtract compensation amounts in excess of an annual salary of $100,000: $1,200,000
    Average monthly qualifying payroll: $100,000
    Multiply by 2.5 = $250,000
    Maximum loan amount is $250,000
  • Example 3 – No employees make more than $100,000, outstanding EIDL loan of $10,000.
    Annual payroll: $120,000
    Average monthly payroll: $10,000 Multiply by 2.5 = $25,000
    Add EIDL loan of $10,000 = $35,000 Maximum loan amount is $35,000
  • Example 4 – Some employees make more than $100,000, outstanding EIDL loan of $10,000
    Annual payroll: $1,500,000
    Subtract compensation amounts in excess of an annual salary of $100,000: $1,200,000
    Average monthly qualifying payroll: $100,000
    Multiply by 2.5 = $250,000
    Add EIDL loan of $10,000 = $260,000
    Maximum loan amount is $260,000

Use our calculator to learn more about what relief might be available for you and your business under the EIDL and PPP programs. 

Loan forgiveness

The loan will be forgiven in full if you can maintain the same level of payroll for the next 24 weeks from the time of loan origination with a cutoff date of December 31, 2020 (whichever comes first).

If you maintain a lower level of payroll during those 24 weeks, the loan can be forgiven proportionally based on the level of payroll maintained.

*June 5 Update* See question on the Paycheck Protection Program Flexibility Act for more details.

This new act results in:

  • Loan Applications Ongoing, Forgiveness Expands
  • Forgiveness Restrictions Eased
  • Extends Measurement of FTE Salary/Wage Period
  • Rehiring Exceptions
  • Loan Maturity and Deferment Period Expanded
  • Interim Final Rules on Loan Forgiveness

Paying back the loan

You do not have to make payments for six months, however, interest will accrue during this deferral period. While the Act allows a one-year deferment, current terms allow deferring for only six months. The interest rate is one percent, and all loans must be repaid within five years.

Details on how loan forgiveness works

The actual amount of loan forgiveness will depend, in part, on the total amount of payroll costs, payments of interest on mortgage obligations incurred before February 15, 2020, rent payments on leases dated before February 15, 2020, and utility payments under service agreements dated before February 15, 2020, over the 24-week period following the date of the loan. However, not more than 40 percent of the loan forgiveness amount may be attributable to non- payroll costs. While the Act provides that borrowers are eligible for forgiveness in an amount equal to the sum of payroll costs and any payments of mortgage interest, rent, and utilities, the Administrator has determined that the non-payroll portion of the forgivable loan amount should be limited; and thus, only 40 percent of the forgiven amount may be used towards non-payroll expenses such as rent, etc.  

Visit the SBA website for full details on loan forgiveness, or the U.S. Treasury overview page.

Use our calculator to learn more about what relief might be available for you and your business under the EIDL and PPP programs.

The Paycheck Protection Program Flexibility Act became law on June 5.

Here are the key updates:

  • Loan Applications Ongoing, Forgiveness Expands: Businesses may still apply for a Paycheck Protection Program loan via their business bank or another resource such as Paypal. This has not changed. The forgiveness period has been expanded from 8 weeks from the time of loan origination to 24 weeks with a cutoff date of December 31, 2020, whichever comes first. This means nearly every borrower can qualify for forgiveness – pending they meet the criteria below.
  • Forgiveness Restrictions Eased: The new laws clarify that only 60 percent of forgivable expenses must be used on payroll (down from 75 percent) and clarifies that other forgivable costs could be used for items like rent, mortgage interest and utilities.
  • Extends Measurement of FTE Salary/Wage Period: Previously, businesses could not reduce salary or wages during the forgiveness period or the “forgivable amount” of the loan would be accordingly reduced. Now, wages must be restored between June 30 and December 31. This, plus the extension of the forgivable period, means that if borrowers spend all of their loan on payroll costs and other eligible expenses for the 24 weeks following loan origination, and keep salaries and wages the same or greater to their wages on February 15, the entire loan amount will be forgiven.
  • Rehiring Exceptions: The SBA has released several re-hiring exceptions, including one for when the borrower can cannot find qualified employees for open positions, and a second for when the borrower cannot restore operations to pre-pandemic levels due to social distancing, sanitation, or customer safety requirements.
  • Loan Maturity and Deferment Period Expanded: The maturity date on loans after the forgiveness period has increased from two years to five. The deferment period has been extended from six months, to the date that the borrower’s forgiveness amount is determined.
  • Interim Final Rules on Loan Forgiveness: Much remains to be seen about loan forgiveness for independent contractors specifically, but additional clarification has been provided for small businesses.  

You can submit a request to the lender that is servicing the loan.

The request will include documents that verify the number of full-time equivalent employees (including yourself, if you're the only employee) and pay rates, as well as the payments on eligible mortgage, lease, and utility obligations. You must certify that the documents are true and that you used the forgiveness amount to keep employees and make eligible mortgage interest, rent, and utility payments.

The lender must make a decision on forgiveness within 60 days.

Use our calculator to learn more about what relief might be available for you and your business under the EIDL and PPP programs.

The PPP Loan only covers losses related to payroll, rent, mortgage interest, or utilities.

More details on what the proceeds from the loan can be used for:

  • Payroll costs, including benefits;
  • Interest on mortgage obligations, incurred before February 15, 2020;
  • Rent, under lease agreements in forcebefore February 15, 2020; and
  • Utilities, for which service began before February 15, 2020.

Use our calculator to learn more about what relief might be available for you and your business under the EIDL and PPP programs.

Treasury issued a clarification to rules indicating that businesses engaging independent contractors should not factor them into their payroll costs, as independent contractors can apply on their own. This seems to be intended to prevent double-dipping. 

Use our calculator to learn more about what relief might be available for you and your business under the EIDL and PPP programs.

One percent, with a two-year maturity date.

While the Act provides that a loan will have a maximum maturity of up to ten years from the date the borrower applies for loan forgiveness (described below), the Administrator, in consultation with the Secretary, determined that a two-year loan term is sufficient in light of the temporary economic dislocations caused by the coronavirus. Specifically, the considerable economic disruption caused by the coronavirus is expected to abate well before the two-year maturity date such that borrowers will be able to re-commence business operations and pay off any outstanding balances on their PPP loans.

Use our calculator to learn more about what relief might be available for you and your business under the EIDL and PPP programs.

No. You may only apply once, so if you apply, consider applying for the maximum amount. While the Act does not expressly state that you may note, the Administrator has determined that one loan per borrower limitation is necessary and that all loans must be made by June 30, 2020, so as to ensure that as many borrowers as necessary may receive a PPP loan.

Use our calculator to learn more about what relief might be available for you and your business under the EIDL and PPP programs.

You can learn more at the Small Business Administration (SBA) website.

The U.S Treasury Department has a dedicated PPP Page with updated information, including:

Use our calculator to learn more about what relief might be available for you and your business under the EIDL and PPP programs.

Choosing the Right Loan for You

If you’re only trying to recover payroll and overhead, the PPP loan is probably the best option for you. Especially since you could get it totally forgiven. You can still apply for the EIDL grant ($1,000 advance per employee up to $10,000) without applying for the larger loan. You should likely only apply for the larger EIDL loan if you need assistance beyond recovery from payroll losses.

We advise you to consult with a tax professional for details related to your unique situation. The two programs can be combined, but there are specific provisions about how you can use each program. The details on this are still evolving.

Use our calculator to learn more about what relief might be available for you and your business under the EIDL and PPP programs.

The two programs can be combined, but there are specific provisions about how you can use each program. The details on this are still evolving. 

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You will have to sign certifications that you are entitled to these funds. Note that you can’t take the same amount of the EIDL loan for payroll and then take the PPP loan and claim it on both sides (considered double dipping). If you take out both loans, whatever is forgiven on the PPP loan will be deducted from the EIDL loan. But you can, if eligible, claim both benefits.

This is a bit complicated, so we suggest discussing with a tax professional for more details related to your unique situation.

Use our calculator to learn more about what relief might be available for you and your business under the EIDL and PPP programs.

Use our calculator to learn more about what relief might be available for you and your business under the EIDL and PPP programs.

The calculator will walk you through a few scenario-building questions to understand your unique business setup and need, and then provide details about how much loan or grant funding may be available for you, as well as where to apply. This calculator considers inputs for both Emergency Injury and Disaster Loans (EIDL) and the Paycheck Protection Program (PPP) loans and makes a recommendation about which program – or which combination of programs – is best for you.

This calculator is an estimate of available benefits for independent consultants and freelancers who earn income for services provided. 

Stay Informed!

Programs and benefits are evolving rapidly. States’ responses continue to unfold, in parallel with the Federal response. Sign up for MBO’s Newsletter, and we’ll send you updates when new benefits emerge for independents.

The information provided here does not constitute legal, tax or financial advice. It does not take into account your particular circumstances, objectives, legal and financial situation or needs.  Before acting on any information, you should consider the appropriateness of the information for your situation in consultation with a professional advisor of your choosing. This is a rapidly changing area of the law and will be subject to change and interpretation.