Paycheck Protection Program for Independent Contractors

Starting today, April 10 2020, independent contractors and self-employed individuals can apply for the Paycheck Protection Program (PPP), part of the government’s Covid-19 stimulus.

⚠️ There is lots of talk out there about “free money” or “forgivable loans” — which is frankly dangerous if you don’t have the full information, so we want to be clear: For 99% of independent contractors, this loan will not be forgiven — you will need to pay it back, just like any other loan.

Paycheck Protection Program (PPP) Key Points:

As an independent contractor, you can receive a loan through this program. It has relatively good terms (1%, 2 years) but it’s still a loan that needs to be paid back.
What about the talk about the loan being forgivable? Here’s the short of it: The loan is not easily forgivable for independent contractors and the self-employed.
If you’d like to explore this loan, we’d recommend that you see it as a loan that needs to be paid back.

Why is the loan unlikely to be forgiven for self-employed?

The loan is only forgivable if you follow strict requirements which are very hard for self-employed people to do, or frankly, not even clear in the law how it can be done.
- (For example, it’s not clear if a self-employed person paying themselves is considered payroll.)
- The requirements include that the “intent” of the loan is to:
  - Keep employees on payroll
  - Rehire employees you laid off,
  - Pay for specific expenses like office rent, utilities and interest
- You’re also required to keep very detailed business records, e.g. cash flow and profit & loss statements that most self-employed people to do not keep. If you’d like to explore this, you should consult with a trusted tax professional.