Today, the second phase of the CARES (Coronavirus Aid Relief and Economic Security) Act goes into effect. This means that independent contractors and the self-employed can apply for the Paycheck Protection Program (PPP) Loans available to businesses impacted by the coronavirus pandemic. You must apply for the program through a bank. Download the application form. The PPP Program opened on April 3, and the roll-out has been hindered by computer system problems at banks due to an influx of applications. The need for these loans is great.
Loan Details and Forgiveness
- The maximum loan size is up to 2.5 times your average monthly 1099-MISC or net self-employment income for the past 12 months.
- All amounts spent on the following list of items during the first 8 weeks of the loan term are 100% forgivable: (a) to replace your 1099-MISC income or your net self-employment income, (b) interest on mortgages, (c) business rent, and (d) business utilities. Note that if more than 25% of this amount is used for interest on mortgages, business rent, and business utilities, not all of the amount spent may be forgivable.
- The interest rate is fixed at 1% and the loan term is 2 years.
- Loan payments will also be deferred for six months.
- No collateral or personal guarantees are required.
- Neither the government nor lenders will charge small businesses any fees for the loans.
- You should apply for a PPP loan as soon as possible. Check eligibility, though.
- PPP loans are available for the lesser of $10 million or 2.5 times the average monthly payroll.
- 100% of your loan could be forgiven.
- You can apply for both PPP and Economic Injury Disaster Loans and Loan Advance (EIDL) loans. (For more on how to apply to the EIDL Program, see our video at https://youtu.be/SzwQp11n-YQ.)
- Also, check State and Local resources.
New Bill Would Distribute $3 Billion to Support Minority Firms Affected By COVID-19 – Black Enterprise
Webinar Details How Small African American Businesses Can Receive Funds Through the CARES Act – Black Enterprise
This article was written by Creative Investment Research.