Self-employed, independent contractors can now apply for PPP loans
Photo | Grant Welker
Downtown Worcester in the middle of a weekday during the coronavirus shut down
Independent contractors receiving 1099-MISC forms and self-employed workers may now apply for forgivable Payroll Protection Program loans through the U.S. Small Business Association, marking a significant change in relief fund eligibility.
The change went into effect on Friday, April 10.
In order to be eligible, individual businesses must have been in operation on Feb. 15, and must also have been harmed by the ongoing COVID-19 pandemic, the Worcester Regional Chamber of Commerce explained in a statement.
Loans may be as large as 2.5 times a contractor's average net monthly income, based on 1099-MISC or net self-employment income earned over the last calendar year.
The loans may be used to replace normal net income, capped at $100,000 per year, per employee. They may also be used on mortgage payments, rent and utilities, so long as these financial obligations were in place as of Feb. 15.
In the first eight weeks, all loan money spent on replacing net income is forgivable, according to the chamber's analysis. Money spent on mortgage interest, business rent and business utilities is also forgivable in the first eight weeks, although if more than 25% of money taken out goes toward those costs, it may not all be forgiven.
For in-depth analysis on the PPP program, click here to watch recordings of two webinars WBJ hosted on the matter.
The PPP loans come with a fixed 0.5% interest rate and a six-month deferment period. To find an institution making PPP loans, visit the SBA website. WBJ has a list of SBA-approved banks in Massachusetts, with contact information, available here.
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