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.
Our takeaway:
- 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 see our video at https://youtu.be/SzwQp11n-YQ.) (EIDL) loans. (For more on how to apply to the EIDL Program,
- Also, check State and Local resources.
More information:
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.