Covid-19 relief loans for contractors are a welcomed help for many without financial buffers.

An unprecedented number of American workers have been laid off or lost their employment outright, due to the Covid-19 pandemic. Another hard-hit sector of workers that has felt the pain is the self-employed.

Freelancers and independent-contractors experienced the dramatic depletion of incoming work as well as their budgets paralyzed. The great divide between the two is that employees have more accessible financial support than their self-employed counterparts. 

Thanks to the Coronavirus Aid, Relief, and Economic Security Act (CARES), the $2 trillion stimulus package signed into law included specific provisions for self-employed workers. 

Provisions For The Self-Employed

The Small Business Administration (SBA) has led the way in providing accessible provisions and relief for struggling small businesses. Also included were options for “independent contractors” and a potential for loan forgiveness. There are also new initiatives provided by local, state, and industry organizations.

The Provisions are the following:

  • Economic Disaster Impact Loans (EIDLs): Within this program, businesses can access “unsecured working capital loans” up to $10,000. Businesses can also apply for up to $2 million. This program serves as a relief for businesses experiencing a “temporary” loss of income. The program was launched on April 3 for small businesses with less than 500 employees. Independent contractors were able to apply on April 10.

According to the SBA website, the funds will be accessible upon receiving a “successful application”. This loan advance does not need to be paid back. The only limitation is that the loan can only be utilized for “fixed debts”, such as payroll, rent, accounts payable, and any other outstanding bills due to the Covid-19 impact. Some of the required documentation may include tax returns and “a current year profit and loss statement.”

  • Paycheck Protection Program Loans (PPP): Small businesses can apply for assistance through the PPP via any SBA 7(a) lender, or a participating “federally insured credit union”, “federally insured depository institution”, and “Farm Credit System institution”. This program provides small business assistance to cover payroll and benefits for eight weeks. The loans should also be used to take care of utilities, rent, and mortgages. Only if the loans are utilized for the specified reasons, there is a possibility that the loan can be forgiven partially or entirely. 
  • Extended Unemployment Insurance: The CARES Act granted states the opportunity to extend unemployment compensation. This includes an increase of $600 a week for independent contractors since they normally don’t qualify for benefits. In order to get more details, do contact your state unemployment office. 
  • Grants and Relief Funding: Several state, local, corporate, and non-profit programs are accessible to independent contractors. They are not easily found, but it helps to seek industry groups and “media roundups of grant-making groups”. For these grants, it will set you apart if you take the time to write a well-thought out essay, explaining why you would benefit from these funds.  Educate yourself online with free webinars on how to apply for grants. 

Another good place to find grant opportunities is both your state and local departments of economic development, professional associations, industry association, and nonprofits that are industry focused. 

Keep At It

The reason independent contractors are self-employed is because they are “go-getters” by nature. It’s important that they continue to take the initiative to learn more about getting the help they need for their business. The rewards could mean more open doors to new contacts, opportunities, and at the end…a gold rush of new business. 

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