Nikki attended a town meeting with Senator Murphy and Mark Hayward of the SBA today, and now has some points of clarification for SOLE PROPRIETOR / SELF-EMPLOYED / INDEPENDENT CONTRACTOR folks:
The PPP is now available for applications. This is the Payroll Protection Plan under the CARES Act. You would apply through a bank (credit union/savings bank) that is 7(a) approved under the SBA. If you do not know, ask your preferred bank or visit the SBA website for a listing. See a list here: https://www.sba.gov/local-resources/connecticut
The intention of the PPP is to allow small business owners (under 500 employees and for sole proprietors, whether an LLC or not) to be able to cover full payroll costs and take their employees OFF Unemployment (U.I.) and retain their employees while the employees can continue to retain their benefits (health, leave, FMLA, etc).
A sole proprietor may take PPP or UI. The PPP is meant to cover 8 weeks of payroll and benefits, as well as a portion to cover operating expenses, such as rent or cell phone bill. If you have applied for the EIDL (economic disaster relief loans) that is a means to cover the Operating expenses, not the payroll. If you are approved for funds through one, you may also receive funds from the other, but you cannot use them for the same thing.
A sole proprietor will use their net earnings for one full year (use your 2019 tax, or 2018 tax return if 2019 is not filed, or ask your bookkeeper or accountant for help), divide by 12, then multiply by 2.5 for the total allowed under PPP. The amount may not exceed $100,000. The 2% is the 8 weeks of income and the 0.5% is for your other operating expenses (rent, utilities, phone, internet, etc) for the business. Once this is over (after June 3, 2020), you will need to go back to your lender and show them that you have used the funds as intended. Once you prove that (KEEP RECEIPTS!!!! and be prepared to show the money as ‘draw’ or paying expenses) your funds will be forgiven. This would keep you from using the UI funds that the Federal Government is providing.
There are full details available on the SBA site and your lender should be able to help you. PLEASE NOTE: The PPP is available to small businesses, including sole proprietors, etc. Do NOT let them tell you that you must wait to apply or are not covered, This statement is from CEDF, Senator Murphy, and the SBA.
Try a different lender. Also, reach out to SBA or CEDF (LINK: https://www.cedf.com) as they have lists of banks that have responded ‘yes!’ to working with small businesses, even those that they do not currently have relationships with.
Having said all this, the SBA Disaster relief loans ARE still open and available. The option for Unemployment is STILL an option, although there is a backlog and you will need to be patient. The Bridge Loans from CT are currently closed to applications.
I hope that this helps.
Nikki Arel, AMTA-CT Chapter, GR Chair